The round number heuristic and entrepreneur crowdfunding performance

Tse-Chun Lin and Vesa Pursiainen

Journal of Corporate Finance, 2021, vol. 68, issue C

Abstract: 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.

Keywords: Crowdfunding performance; Round number heuristic; Kickstarter; Fintech; Entrepreneur (search for similar items in EconPapers)
JEL-codes: D22 D81 D91 G23 G41 L26 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:68:y:2021:i:c:s0929119921000146

DOI: 10.1016/j.jcorpfin.2021.101894

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