When Small Predicts Large: The Effect of Early Contribution Amount on Subsequent Contributions to a Crowdfunding Project
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AbstractCrowdfunding has emerged as a novel way of fundraising by asking many people to contribute money to an entrepreneur’s project through online platforms. This research examines how and why, at the early-stage of a crowdfunding campaign, the amount of money contributed by a majority of the funders can have profound influence on follow-up contributions and the campaign’s likelihood of reaching its fundraising goal. Findings from five studies and large-scale field data show that potential funders are more (vs. less) likely to contribute to a newly launched project when early contributions are mainly consisted of relatively small (vs. large) amounts. We further show that these counterintuitive results are driven by a “friendship-giving” lay belief. That is, at the early-stage of a project launch, a potential funder is more likely to infer large contributions as made by the entrepreneur’s friends or family, but small contributions as made by complete strangers. Inferring a close social relationship between the entrepreneur and early-stage funders is shown to negatively affect consumer’s willingness to contribute via reduced liking for these early funders. As a crowdfunding campaign gets closer to its funding goal, however, this inference and its subsequent effects are attenuated.
Acceptance Date16/07/2017
All Author(s) ListTingting Fan; Leilei Gao; Yael Steinhart
Name of ConferenceThe 2nd Coller Conference on Behavioral Economics (CCBE)
Start Date of Conference16/07/2017
End Date of Conference17/07/2017
Place of ConferenceTel Aviv University
Country/Region of ConferenceIsrael
LanguagesEnglish-United States
Keywordscrowdfunding, lay belief, signaling, money giving, social influence

Last updated on 2018-20-01 at 18:38