Experts in the Crowd and their Influence on Herding in Reward-based Crowdfunding of Cultural Projects

Abstract

The present research investigates certification effects and rational herding in reward based crowdfunding (RBCF) campaigns of cultural projects. The authors analyse data obtained from France’s leading RBCF platform, Ulule, and show that the contributing crowd is heterogeneous in terms of expertise. Testing the impact of different backer categories on (1) campaign success and (2) overall day-by-day funding dynamics, the study provides evidence of the existence of a certification effect and rational herding. Contributions from expert backers are perceived as positive quality signals by potential future backers. Experts hence lead the crowd, and this effect appears to be robust.

Keywords: Reward-based crowdfunding, culture, experts, information cascades, rational herding

JEL Classification: G00, M21