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Overfunding and Signaling Effects of Herding Behavior in Crowdfunding


  • Svatopluk Kapounek
  • Zuzana Kucerová


The paper employs a dynamic market-wide herding behavior measure of 117,166 lending-based campaigns in 119 online platforms in 37 countries that explores whether lenders follow each other in the whole crowdfunding market, within the groups of top platforms, within the specific category or platform, and within the specific category in the specific platform. We show that herding behavior plays an important signaling role in reducing opportunity costs if the auction does not receive enough monetary bids. Additionally, our threshold models identify significant herding behavior after funding goals are raised and highlight the controversial effects of signaling mechanisms on adverse selection in crowdfunding markets.

Suggested Citation

  • Svatopluk Kapounek & Zuzana Kucerová, 2019. "Overfunding and Signaling Effects of Herding Behavior in Crowdfunding," CESifo Working Paper Series 7973, CESifo.
  • Handle: RePEc:ces:ceswps:_7973

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    References listed on IDEAS

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    Cited by:

    1. Irene Comeig & Ernesto Mesa-Vázquez & Pau Sendra-Pons & Amparo Urbano, 2020. "Rational Herding in Reward-Based Crowdfunding: An MTurk Experiment," Sustainability, MDPI, vol. 12(23), pages 1-21, November.

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    More about this item


    asymmetric information; crowdfunding; herding behavior; overfunding; peer-to-peer lending; signaling;
    All these keywords.

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • D26 - Microeconomics - - Production and Organizations - - - Crowd-Based Firms
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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