Altruism Pushes Crowdfunders Over Their Target

Two researchers have uncovered the psychology to crowdfunding.

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A paper from the UCLA Anderson School notes that as the crowdfunding campaign nears its targeted goal, the herding mentality of investors is initiated (play with the winner) and risk of failure is mitigated.

But the research shows that as the goal is reached, neither of those reasons spur the final race to the target. It’s actually altrusim, the desire of the crowd to see the campaign succeed.

The social scientists found that campaigns raised money faster when they were 95% funded than when they were trying to reach “stretch” goals of greater than 100% funding.

This is called in the trade “prosocial motivation.” Get onboard.

http://www.anderson.ucla.edu/faculty-and-research/anderson-review/kickstarter

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in accredited investor, balance, Charity, checkbook, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, Funding Portals, Investments, Jobs, Legislative Intent, review, SEC, Small Business, technology, VC, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

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