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Better to Give than to Receive: Impact of Donation Option on Reward-based Crowdfunding Campaigns

Published in Information Systems Research, 2023

Motivated by the adoption of donation schemes at some leading reward-based crowdfunding platforms, we examine the effect of adding a donation scheme to reward-based crowdfunding and explore its underlying mechanisms. This work also helps to fill the knowledge gap on the role of funding schemes. Leveraging an unannounced site change at a leading crowdfunding platform, we estimated the impact of introducing the donation scheme by developing and applying a novel two-step matching and difference-in-differences technique for cohorted quasi-experimental settings. We find that the introduction of the donation scheme increased the success rate of reward campaigns by 19%. The increased success occurred mainly in reward campaigns with prosocial causes. Further analyses of underlying mechanisms reveal that the increased campaign success came mainly from campaigns that received donations. The added donation channel not only had a primary effect, as evidenced by a third of campaigns attracting donations, but also a secondary “crowd-in” effect on the reward channel, as shown by a positive impact of early donations on subsequent contributions through the reward channel, beyond the known effects of early contributions. Our findings suggest that, for reward campaigns with prosocial causes, the addition of a donation channel not only provides a better fit for some backers of reward campaigns, but also inspires others to be more willing to contribute through the reward channel.

Recommended citation: Jason Chan, Zihong Huang, De Liu, Zhigang Cai (2023) Better to Give Than to Receive: Impact of Adding a Donation Scheme to Reward-Based Crowdfunding Campaigns. Information Systems Research, [Download paper here]

Pure and Hybrid Crowds in Crowdfunding Markets

Published in Financial Innovation, 2016

This study documents and compares two crowd designs for crowdfunding, namely pure crowds, where all crowd members participate as equals, and hybrid crowds, where crowd members are led by an expert investor. The hybrid design is rarely studied in the crowdfunding literature despite its large presence in equity crowdfunding. We examine industry practices from various countries in terms of crowd designs, review relevant literature on this topic, and develop a conceptual framework for choosing between pure and hybrid crowds. We identify several inefficiencies of pure crowds in crowdfunding platforms and discuss the advantages of hybrid crowds. We then develop a conceptual framework that illustrates the factors for choosing between pure and hybrid crowds. Finally, we discuss the issue of how to manage and regulate lead investors in hybrid crowds. Our study contributes to the crowdfunding literature and to crowdfunding practice in multiple ways.

Recommended citation: Chen, Liang, Zihong Huang, and De Liu. "Pure and hybrid crowds in crowdfunding markets." Financial Innovation 2.1 (2016): 19. [Download paper here]

Precision CrowdSourcing: Closing the Loop to Turn Information Consumers into Information Contributors

Published in Proceedings of the 19th ACM Conference on Computer-Supported Cooperative Work & Social Computing (CSCW), 2016

We introduce a theoretical framework called precision crowdsourcing whose goal is to help turn online information consumers into information contributors. The framework looks at the timing and nature of the requests made of users and the feedback provided to users with the goal of increasing long-term contribution and engagement in the site or system. We present the results of a field experiment in which almost 3000 users were asked to tag movies (plus a null control group) as we varied the selection of task (popular/obscure), timing of requests (immediate or varying delays), and relational rhetoric (neutral, system reciprocal, other users reciprocal) of the requests. We found that asking increases tags provided overall, though asking generally decreases the provision of unprompted tags. Users were more likely to comply with our request when we asked them to tag obscure movies and when we used reciprocal request rhetoric.

Recommended citation: Zhao, Qian, Zihong Huang, F. Maxwell F. Harper, Loren G. Terveen, and Joseph A. Konstan. "Precision CrowdSourcing: Closing the Loop to Turn Information Consumers into Information Contributors." In Proceedings of the 19th ACM Conference on Computer-Supported Cooperative Work & Social Computing, pp. 1613-1623. ACM, 2016. [Download paper here]