Herd Behavior in Reward Crowdfunding: A Field Experiment

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Published: Apr 25, 2023
Updated: 2023-04-25
Versions:
2023-04-25 (5)
DOI: https://doi.org/10.17163/ret.n25.2023.01
Keywords:
consumer behavior, Crowdfunding, experiments, field experiment, herd behavior, peer effects, sharing economy, SME

Main Article Content

Irene Comeig-Ramírez
http://orcid.org/0000-0002-0497-0907
Federico Ramírez-López
https://orcid.org/0009-0003-0066-4210
Ferran Portilla-Salas

Abstract

eward-based crowdfunding is becoming a very attractive funding alternative for early-stage entrepreneurial initiatives. Among thefactors that may influence the success of such campaigns is herd behavior, i.e., the tendency to mimic the funding decisions of previous backers.The herd effect has been shown to be robust in previous research as a rational act that supports campaigns more likely to achieve the funding goal, i.e., to succeed. In this paper we go beyond that empirical result from previous literature and analyze whether herding behavior occurs in reward crowdfunding even without the rational factor, as a simple imitation of previous behavior, regardless of the rational motivation for project success.For this purpose, a field experiment is designed and executed in a real crowdfunding campaign for a cultural project on the Verkami platform, themost powerful platform for cultural projects in Spain. This field experiment is designed to analyze the causality between the decisions of previousbackers on the color of a reward and the choices of subsequent backers. The results clearly show non-rational herd behavior in the choices ofsubsequent patrons in reward crowdfunding, who mostly choose the same color as the initial contributions. Practical implications for campaigndesign and its possible consequences are discussed in the article.

Article Details

Issue
Vol. 13 No. 25 (2023): (April-September)
Section
Monographic section
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