Investors’ Inertia Behavior and Their Repeated Decision-Making in Online Reward-Based Crowdfunding Market

Published at Decision Support Systems, Volume 111, (2018)

34 Pages Posted: 2 Aug 2018

See all articles by Shengsheng Xiao

Shengsheng Xiao

Shanghai University of Finance and Economics

Qing Yue

Shanghai University of International Business and Economics

Date Written: July 1, 2018

Abstract

Extending recent work on individual-level decision in the emerged reward-based crowdfunding market, we formulated a Panel Vector Auto Regression Model with exogenous variables to examine whether investors’ Inertia Behavior (IB) exists in their repeated investment decisions (i.e., which reward tier to select and when to invest). If so, how to quantify the effect of this behavior and how investors’ heterogeneity moderates the effect of this behavior. We collected a novel and individual-level dataset from a leading crowdfunding market. Our analysis suggests the existence of investors’ IB. Furthermore, we also found that (1) Investors’ IB in reward tier selection seems to be stronger than that in investment timing selection. (2) Investors’ platform tenure significantly accentuates their IB reward tier selection, but weakens that in investment timing selection. (3) Project attributes related factors have different impacts on investors’ decision-making and peer investors’ influence have stronger impact on backers’ investment timing selection when compared with fundraisers’ marketing efforts. Our results provide implications for crowdfunding participants including investors, fundraisers and the crowdfunding intermediaries hosting them.

Keywords: Crowdfunding; Inertia Behavior; Dynamic Repeated Investments; Investment Decision; Reward Tier Selection

Suggested Citation

Xiao, Shengsheng and Yue, Qing, Investors’ Inertia Behavior and Their Repeated Decision-Making in Online Reward-Based Crowdfunding Market (July 1, 2018). Published at Decision Support Systems, Volume 111, (2018), Available at SSRN: https://ssrn.com/abstract=3213824

Shengsheng Xiao (Contact Author)

Shanghai University of Finance and Economics ( email )

No. 100 Wudong Road
Shanghai, Shanghai 200433
China

Qing Yue

Shanghai University of International Business and Economics ( email )

No. 1900, Wenxiang Road
Shanghai, 201620
China

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