Building the Momentum: Information Disclosure and Herding in Online Crowdfunding

Abstract

In online crowdfunding markets, backers face high uncertainty about the quality of a campaign. To mitigate such uncertainty, crowdfunding platforms often allow campaign creators to post communicative messages—that is, campaign updates and creator comments—to dynamically disclose further information about the campaigns. In addition, previous funding transactions of ongoing campaigns are made publicly available, giving rise to herding among backers. In this research, we aim to understand how communicative messages and herding interactively shape the behavior of backers contributing to crowdfunding campaigns. Our results show that the frequency of communicative messages has a positive effect on backer contributions; however, it attenuates successors' herding momentum toward predecessors, perhaps because the information disclosed in those messages lowers the informational value of previous funding transactions. To investigate the role of message contents, we extract topics addressed in update and comment messages using a Latent Dirichlet allocation model. The results reveal that distinct messages have different impacts on backers' contribution and herding behavior, and such discrepancies are found to be topic specific. This study not only contributes to operations management literature on crowdfunding but also offers implications for campaign creators and platform managers.

Extracting Image Characteristics to Predict Crowdfunding Success

“…All these easily extracted image characteristics also matter in the final model (95% CI excluding 0), as do visual elements such as number of concepts (Google Vision API annotation number: 5.37%; 95% CI: [3.37%, 7.37%]) and ease with which people can identify the most salient concept, though less than the sheer number of annotations (Google Vision API maximum confidence: 2.41%; 95% CI: [.67%, 4.14%]). 10 Third, we find that past research was justified in including the number of pictures (5.34%; 95% CI: [4.52%, 6.23%]) and the number of videos (5.77%; 95% CI: [3.38%, 7.74%]) as control variables, because they are important predictors of success. However, their link to crowdfunding success is nonlinear and may not be captured by the inclusion of linear controls or when transformed.…”

“…Mollick [1] argues that the inclusion of video signals preparation and higher project quality; in turn, the presence of video is associated with greater crowdfunding success (see also [7,20,6]. The numbers of images embedded in projects also positively influence backer contributions [21,10]. Project images provide a depth of communication that may not translate to text (e.g., presenting a prototype) and improve perceptions of both campaign informativeness and creator commitment and credibility [10].…”

“…The numbers of images embedded in projects also positively influence backer contributions [21,10]. Project images provide a depth of communication that may not translate to text (e.g., presenting a prototype) and improve perceptions of both campaign informativeness and creator commitment and credibility [10]. Mollick and Nanda [2] suggest that crowds (vs. experts) emphasize visual content, so more "crowdfunding-friendly" proposals are-because they use pictures and videos-the more they appeal to the crowd.…”

“…of communication [10]. Marketing authors focus on predictors of successful communication within project pages, such as information in videos [11,12], emotions in text [13], and price advertising claims [14].…”

Unraveling Risk Networks of Cultivated Land Protection: An Exploratory Stakeholder-Oriented Case Study in Xiliuhe Town, Hubei Province, China

“…A list of 35 risks was preliminarily identified based on the literature review and pre-survey. We followed the studies of Xiao et al [71], Raissa et al [72] and Approach et al [73] and employed their snowball technique to expend the interview sample size across different types of stakeholder groups. Initially, we got in touch with the deputy mayor in Xiliuhe Town (S2).…”