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The Hidden Cost of Accommodating Crowdfunder Privacy Preferences: A Randomized Field Experiment


  • Gordon Burtch

    () (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455)

  • Anindya Ghose

    () (Stern School of Business, New York University, New York, New York 10012)

  • Sunil Wattal

    () (Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122)


Online crowdfunding has received a great deal of attention as a promising avenue to fostering entrepreneurship and innovation. Because online settings bring increased visibility and traceability of transactions, many crowdfunding platforms provide mechanisms that enable a campaign contributor to conceal his or her identity or contribution amount from peers. We study the impact of these information (privacy) control mechanisms on crowdfunder behavior. Employing a randomized experiment at one of the world’s largest online crowdfunding platforms, we find evidence of both positive (e.g., comfort) and negative (e.g., privacy priming) causal effects. We find that reducing access to information controls induces a net increase in fund-raising, yet this outcome results from two competing influences—treatment increases willingness to engage with the platform (a 4.9% increase in the probability of contribution) and simultaneously decreases the average contribution (a $5.81 decline). This decline derives from a publicity effect, wherein contributors respond to a lack of privacy by tempering extreme contributions. We unravel the causal mechanisms that drive the results and discuss the implications of our findings for the design of online platforms. This paper was accepted by Lee Fleming, entrepreneurship and innovation.

Suggested Citation

  • Gordon Burtch & Anindya Ghose & Sunil Wattal, 2015. "The Hidden Cost of Accommodating Crowdfunder Privacy Preferences: A Randomized Field Experiment," Management Science, INFORMS, vol. 61(5), pages 949-962, May.
  • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:5:p:949-962

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    Cited by:

    1. Hornuf, Lars & Schwienbacher, Armin, 2015. "Funding Dynamics in Crowdinvesting," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112969, Verein für Socialpolitik / German Economic Association.
    2. repec:bpj:erjour:v:7:y:2017:i:2:p:14:n:1 is not listed on IDEAS
    3. Oleksandr Talavera & Haofeng Xu, 2018. "Role of Verification in Peer-to-Peer Lending," Working Papers 2018-25, Swansea University, School of Management.
    4. repec:spr:jbecon:v:87:y:2017:i:5:d:10.1007_s11573-017-0852-x is not listed on IDEAS
    5. repec:kap:sbusec:v:50:y:2018:i:2:d:10.1007_s11187-016-9829-3 is not listed on IDEAS
    6. repec:ces:ifodic:v:14:y:2016:i:2:p:19235736 is not listed on IDEAS
    7. Lars Hornuf, 2016. "The Emergence of the Global Fintech Market: Economic and Technological Determinants," IAAEG Discussion Papers until 2011 201606, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    8. Christian Haddad & Lars Hornuf, 2016. "The Emergence of the Global Fintech Market: Economic and Technological Determinants," CESifo Working Paper Series 6131, CESifo Group Munich.
    9. repec:eee:respol:v:46:y:2017:i:9:p:1606-1628 is not listed on IDEAS
    10. repec:kap:sbusec:v:50:y:2018:i:2:d:10.1007_s11187-016-9834-6 is not listed on IDEAS


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