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Referral Incentives in Crowdfunding

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Author Info

  • Naroditskiy, Victor

    ()
    (University of Southampton)

  • Stein, Sebastian

    ()
    (University of Southampton)

  • Tonin, Mirco

    ()
    (University of Southampton)

  • Tran-Thanh, Long

    ()
    (University of Southampton)

  • Vlassopoulos, Michael

    ()
    (University of Southampton)

  • Jennings, Nicholas R.

    (University of Southampton)

Abstract

Word-of-mouth, referral, or viral marketing is a highly sought-after way of advertising. We undertake a field experiment that compares incentive mechanisms for encouraging social media shares to support a given cause. Our experiment takes place on a website set up to promote a fundraising drive by a large cancer research charity. Site visitors who choose to sign up to support the cause are then asked to spread the word about the cause on Facebook, Twitter or other channels. Visitors are randomly assigned to one of four treatments that differ in the way social sharing activities are incentivised. Under the control treatment, no extra incentive is provided. Under two of the other mechanisms, the sharers are offered a fixed number of points that help take the campaign further. We compare low and high levels of such incentives for direct referrals. In the final treatment, we adopt a multi-level incentive mechanism that rewards direct as well as indirect referrals (where referred contacts refer others). We find that providing high level of incentives results in a statistically significant increase in sharing behaviour and resulting signups. Our data does not indicate a statistically significant increase for the low and recursive incentive mechanisms.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7995.

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Length: 18 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:iza:izadps:dp7995

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Keywords: crowdfunding; referral marketing;

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  1. Meer, Jonathan, 2011. "Brother, can you spare a dime? Peer pressure in charitable solicitation," Journal of Public Economics, Elsevier, vol. 95(7), pages 926-941.
  2. Paulo Albuquerque & Polykarpos Pavlidis & Udi Chatow & Kay-Yut Chen & Zainab Jamal, 2012. "Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content," Marketing Science, INFORMS, vol. 31(3), pages 406-432, May.
  3. Bruno S. Frey & Stephan Meier, 2004. "Social Comparisons and Pro-social Behavior: Testing "Conditional Cooperation" in a Field Experiment," American Economic Review, American Economic Association, vol. 94(5), pages 1717-1722, December.
  4. Castillo, Marco & Petrie, Ragan & Wardell, Clarence, 2014. "Fundraising through online social networks: A field experiment on peer-to-peer solicitation," Journal of Public Economics, Elsevier, vol. 114(C), pages 29-35.
  5. Sarah Smith & Frank Windmeijer & Edmund Wright, . "Peer effects in charitable giving: Evidence from the (running) field Abstract: There is a widespread belief that peer effects are important in charitable giving, but surprisingly little evidence on ho," The Centre for Market and Public Organisation 13/302, Department of Economics, University of Bristol, UK.
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