Crowdfunding as Gambling: Evidence from Repeated Natural Experiments
Tolga Demir (),
Ali Mohammad () and
Kourosh Shafi ()
Additional contact information
Tolga Demir: Sabanci University
Ali Mohammad: Copenhagen Business & School and Centre of Excellence for Science and Innovation Studies (CESIS), Royal Institute of Technology
Kourosh Shafi: California State University East Bay
No 481, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies
We explore whether sensation-seeking, a personality trait that involves risk-taking for novelty and thrill, is one of the underlying motivations for participating in peer-to-peer lending crowdfunding markets. To empirically substantiate this argument, we test whether individuals participating in Prosper, one of the largest lending markets in the U.S., reduce their lending activity when gambling in the form of playing the multistate lotteries Powerball and Mega Millions becomes more attractive. Lottery is a repeated natural experiment: lottery jackpots are randomly won and a series of draws with no winners form large jackpots. We find that the thrill of winning a large jackpot lottery, perhaps intensified by advertising and media coverage around this event, fulfills some lenders' desire of sensation-seeking and substitutes participating in Prosper, decreasing their lending activity. We discuss implications for lenders and borrowers, as well as platform organizers and policy makers.
Keywords: Peer-to-peer lending; crowdfunding; lottery; gambling; Fin-Tech (search for similar items in EconPapers)
JEL-codes: G23 G41 (search for similar items in EconPapers)
Pages: 42 pages
New Economics Papers: this item is included in nep-ban and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://static.sys.kth.se/itm/wp/cesis/cesiswp481.pdf Full text (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0481
Access Statistics for this paper
More papers in Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Vardan Hovsepyan ().