The Round Number Heuristic and Entrepreneur Crowdfunding Performance
62 Pages Posted: 16 Aug 2018 Last revised: 7 Jan 2021
Date Written: January 7, 2021
We document a novel pattern that campaign goal amounts set by entrepreneurs on Kickstarter exhibit clear clustering at round numbers. We propose that the round number heuristic, a tendency to adopt round numbers as cognitive shortcuts when facing complicated and uncertain situations, may explain the clustering pattern and predict campaign outcomes. Based on 162,863 campaigns between 2009 and 2017, we ﬁnd a negative relation between the use of round goal amounts and the likelihood of campaign success. Our ﬁndings suggest that setting a round number goal conveys useful information about entrepreneur quality that could be used by campaign backers or platforms.
Keywords: crowdfunding performance, round number heuristic, Kickstarter, ﬁntech, entrepreneur
JEL Classification: D22, D81, D91, G23, G41, L26
Suggested Citation: Suggested Citation