Williamson Seminar on Institutional Analysis: What is the “Crowd” Worth? The Role of Social Influence in Crowdfunding
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4:10 pm - 6:10 pm

C325 Cheit Hall, Haas School of Business

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The Oliver E. Williamson Seminar on Institutional Analysis features current research of faculty, from UCB and elsewhere, and advanced doctoral students who are investigating the efficacy of economic and noneconomic forms of organization. In this seminar, an interdisciplinary perspective–combining aspects of law, economics and organization–is maintained. Markets, hierarchies, hybrids, bureaus, and the supporting institutions of law and politics all come under scrutiny. The aspiration is to progressively build towards a new science of organization.

The OEW Seminar meets on Thursdays from 4:10 – 6:00 pm in room C325 Cheit Hall. Outside speakers normally meet with interested students from 3:00 – 3:45 pm in the IBI Conference room located in room F402 (in the Faculty Wing of the Haas School).

For faculty and students wishing to schedule an appointment, or for more information on the Oliver E. Williamson Seminar, please contact Sandria Frost at sandria_frost@haas.berkeley.edu.

For more information including past seminar schedules please click here.

Fall 2015 Schedule



Title of Talk/Paper
October 29
Lucy Hu
“What is the “Crowd” Worth? The Role of Social Influence in Crowdfunding”


We provide causal evidence that social influence affects funding patterns in crowdfunding. In other words, the size of previous contributions affects subsequent funding decisions. The canonical model of social learning suggests that individuals learn from the actions of previous agents and actions converge over time. However, this has been difficult to establish empirically. The study of social influence is plagued with identification problems such as homophily and correlated shocks. In order to causally estimate the effect of previous contributions, we use a feature of the Indiegogo platform where only a set number of previous funders can be easily seen and every new funder displaces the oldest one in the set. We find that larger (smaller) previous contributions significantly increase (decrease) subsequent contributions. This effect is much larger in business projects, where the contributor receives utility from expecting to own the product, than in art and community projects, where the contributor gives due to social preferences. When looking at the effect of social influence by gender, we find there is asymmetry between males and females. Males are not affected by a large previous contribution but give less when they see a small previous contribution. On the other hand, females give more when observing a large previous contribution and when observing a small previous contribution. This positive social influence effect is driven by females giving more when a large previous contribution is by another female and when a small previous contribution is by a male. We also examine the mechanism through which social influence acts, whether it is information signaling, where an individual learns about the quality of the product through others’ decisions, or contagion, where an individual doesn’t take into account the information about quality contained in the previous contribution but uses it as a basis for his/her contribution. We find that for both large and small previous contributions, the effect operates through contagion. This causal effect of previous contributions on subsequent funding decisions suggest that both entrepreneurs and crowdfunding platforms can better take advantage of the effects of social influence to harness the power of the crowd.