Avoiding Peer Information and Its Effects on Charity Crowdfunding: a Field Experiment

Management Science, Forthcoming

64 Pages Posted: 12 Apr 2021 Last revised: 30 Sep 2022

See all articles by Tat Chan

Tat Chan

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

Li Liao

Tsinghua University - PBC School of Finance

Xiumin Martin

Washington University in Saint Louis - Olin School of Business

Zhengwei Wang

Tsinghua University - PBC School of Finance

Date Written: April 10, 2021

Abstract

We study the behavior of an individual avoiding peer information from a natural field experiment of charity crowdfunding. The unique experimental design enables us to employ an instrumental variable strategy to identify how the behavior influences individual giving and promoting charity campaigns. We find that, even with free access, 89% of individuals chose not to seek peer information. These individuals were less likely whereas their peers were more likely to give and help promote in the past. The behavior would reduce the total distribution of campaigns by 8.5% and the total donation amount by 7.7%. A stylized model is used to illustrate how the pressure from peer comparison drives the individuals not to seek the information, and how this behavior could influence giving and promoting behaviors of a group of marginal individuals.

Keywords: information avoidance, charity giving, crowdfunding, peer comparison, behavioral economics, field experiment

JEL Classification: C93, D82, D83, H41

Suggested Citation

Chan, Tat and Liao, Li and Martin, Xiumin and Wang, Zhengwei, Avoiding Peer Information and Its Effects on Charity Crowdfunding: a Field Experiment (April 10, 2021). Management Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3823764 or http://dx.doi.org/10.2139/ssrn.3823764

Tat Chan

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

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

Li Liao

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China

Xiumin Martin

Washington University in Saint Louis - Olin School of Business ( email )

Saint Louis, MO 63130
United States

Zhengwei Wang (Contact Author)

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China

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