The round number heuristic and entrepreneur crowdfunding performance
Journal
Journal of Corporate Finance
Type
journal article
Date Issued
2021
Author(s)
Abstract (De)
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.
Language
English
Refereed
Yes
Subject(s)
Division(s)
Eprints ID
265101