The Round Number Heuristic and Entrepreneur Crowdfunding Performance

54 Pages Posted: 16 Aug 2018 Last revised: 17 Aug 2019

See all articles by Tse-Chun Lin

Tse-Chun Lin

The University of Hong Kong - Faculty of Business and Economics

Vesa Pursiainen

The University of Hong Kong - Faculty of Business and Economics; University of Zurich - Department of Banking and Finance

Date Written: January 1, 2019

Abstract

Goal amounts set by entrepreneurs in reward-based crowdfunding campaigns exhibit clear clustering at round numbers. The use of round goal amounts is associated with lower likelihood of campaign success and adverse campaign performance for the entrepreneurs. The use of round numbers in prior campaigns has predictive power over subsequent campaign success, suggesting that the round number heuristic conveys information about entrepreneur quality. A quasi-experiment based on a rule change reducing the average entrepreneur quality is associated with increased use of round numbers and weaker resulting campaign performance. The likelihood of setting a round goal amount decreases with entrepreneur experience.

Keywords: Crowdfunding Performance, Round Number Heuristic, Kickstarter, Fintech, Entrepreneur

JEL Classification: D22, D81, D91, G23, G41, L26

Suggested Citation

Lin, Tse-Chun and Pursiainen, Vesa, The Round Number Heuristic and Entrepreneur Crowdfunding Performance (January 1, 2019). Available at SSRN: https://ssrn.com/abstract=3224543 or http://dx.doi.org/10.2139/ssrn.3224543

Tse-Chun Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Vesa Pursiainen (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Hong Kong
Hong Kong

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
Z├╝rich, 8032
Switzerland

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