Prosocial Goal Pursuit Outweighs Herding in Crowdfunding: Evidence from Kickstarter.com

49 Pages Posted: 19 Apr 2017 Last revised: 16 Aug 2018

Hengchen Dai

University of California, Los Angeles (UCLA) - Anderson School of Management

Dennis Zhang

Washington University in St. Louis - John M. Olin Business School

Date Written: August 15, 2018

Abstract

In the reward-based crowdfunding context, creators of entrepreneurial projects solicit capital from potential consumers to reach a funding goal and offer future products/services in return. We examine consumers’ contribution patterns using a novel dataset of 28,591 projects collected at 30-minute resolution from Kickstarter.com. Extending past research that draws on standard utility-based theory and focuses on consumers’ economic considerations, we provide the cleanest field evidence so far that consumers also have prosocial motives to help creators reach their funding goals. We find that projects collect funding faster right before (vs. right after) they meet their funding goals because consumers not only are more willing to fund projects but also contribute greater amounts of money prior to goal attainment. This effect is amplified when the nature of a project tends to evoke consumers’ prosocial motivation and when a project’s creator is a single person. These results suggest that consumers’ prosocial motives not only play a role in reward-based crowdfunding, but also can outweigh the opposing effects of economic factors including herding and certainty about crowdfunding campaign success.

Keywords: Goal, Prosocial Motivation, Herding, Decision Making, Crowdfunding

JEL Classification: D03, D12, D83

Suggested Citation

Dai, Hengchen and Zhang, Dennis, Prosocial Goal Pursuit Outweighs Herding in Crowdfunding: Evidence from Kickstarter.com (August 15, 2018). Available at SSRN: https://ssrn.com/abstract=2954217 or http://dx.doi.org/10.2139/ssrn.2954217

Hengchen Dai

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Dennis Zhang (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

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