Paper ID

2853

Paper Type

short

Description

Overcoming informational uncertainty and financial risk remains a challenge for crowd investors to trust and interact within the equity crowdfunding (ECF) market. Based on the theoretical lens of herding behavior, we demonstrate that visual cues in investor profiles impact the investment decision of subsequent investors. Specifically, this paper provides preliminary evidence on the effect of investor profile images and badges on investment behavior and campaign funding. In a first study, we draw on a dataset of over 30,000 individual investment observations from a leading ECF platform to show that profile images in particular exert positive effects on subsequent investments. Study 2 will build on these findings through a discrete choice experiment. Our results indicate that herding is driven by the perception of credible investors triggered by heuristic cues. Implications for platform operators are discussed in the paper.

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Trust isn’t blind: Exploring Visual Investor Cues in Equity Crowdfunding

Overcoming informational uncertainty and financial risk remains a challenge for crowd investors to trust and interact within the equity crowdfunding (ECF) market. Based on the theoretical lens of herding behavior, we demonstrate that visual cues in investor profiles impact the investment decision of subsequent investors. Specifically, this paper provides preliminary evidence on the effect of investor profile images and badges on investment behavior and campaign funding. In a first study, we draw on a dataset of over 30,000 individual investment observations from a leading ECF platform to show that profile images in particular exert positive effects on subsequent investments. Study 2 will build on these findings through a discrete choice experiment. Our results indicate that herding is driven by the perception of credible investors triggered by heuristic cues. Implications for platform operators are discussed in the paper.