Enpresen Kudeaketa Saila

Lugar: Seminario Simon

Ponente: Gabriel Rodríguez Garnica (Universidad Carlos III de Madrid)

Título: Signaling and herding in reward-based crowdfunding: Complements or substitutes?

Abstract: 

This paper investigates the complex interplay between signaling and herding behavior in reward-based crowdfunding platforms like Kickstarter. We find that during the initial phase of the campaign, the funding decisions of a reduced number of early backers are based on quality signals offered by the creator. However, during the second phase, signaling is substituted by the herding behavior of a large number of late backers imitating early backers. Therefore, although they are observed sequentially, herding and signaling complement each other as the crowdfunding campaign evolves, increasing the size and attractiveness of the reward-based crowdfunding market. Our results show that a significant proportion of the funding in a reward-based crowdfunding campaign comes from backers who do not pay much attention to quality signals but rely instead on the observable behavior of the earlier backers that make their decisions based on the quality signals provided by the creator. This has important entrepreneurial and regulatory implications which we discuss in the last part of the paper.