Sharing Economy, Platforms and Crowds
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Paper Number
2338
Paper Type
Completed
Description
Today's digital era facilitates the rise of crowdfunding markets by allowing investors to better gather and process information about crowdfunding projects. Yet the abundance of information creates greater distractions for investors and causes a hike in their cost of attention. Unlike traditional funders of entrepreneurs, crowdfunding investors aggregate information individually, and so understanding how distractions that divert investor attention influence investor behavior and crowdfunding performance is very important for entrepreneurs as well as crowdfunding platforms. To that end, we develop a model wherein investors with limited attention aggregate personalized information about (reward-based) crowdfunding projects and conduct comparative analyses on how rises in investors’ marginal attention cost (associated with greater distractions) affects investor attention, investment decisions and so crowdfunding performance. We then exploit a novel measure of distraction---news pressure---to test the effects of distraction on investor engagement and crowdfunding performance empirically, and the results support our model predictions.
Recommended Citation
Hu, Lin; Li, Kun; Wu, Zhenhua; and Gu, Bin, "Investor Attention and Crowdfunding Performance" (2021). ICIS 2021 Proceedings. 18.
https://aisel.aisnet.org/icis2021/sharing_econ/sharing_econ/18
Investor Attention and Crowdfunding Performance
Today's digital era facilitates the rise of crowdfunding markets by allowing investors to better gather and process information about crowdfunding projects. Yet the abundance of information creates greater distractions for investors and causes a hike in their cost of attention. Unlike traditional funders of entrepreneurs, crowdfunding investors aggregate information individually, and so understanding how distractions that divert investor attention influence investor behavior and crowdfunding performance is very important for entrepreneurs as well as crowdfunding platforms. To that end, we develop a model wherein investors with limited attention aggregate personalized information about (reward-based) crowdfunding projects and conduct comparative analyses on how rises in investors’ marginal attention cost (associated with greater distractions) affects investor attention, investment decisions and so crowdfunding performance. We then exploit a novel measure of distraction---news pressure---to test the effects of distraction on investor engagement and crowdfunding performance empirically, and the results support our model predictions.
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09-Crowds