An empirical examination of peer referrals in online crowdfunding

Gordon Burtch, Anindya Ghose, Sunil Wattal

Research output: Contribution to conferencePaperpeer-review

9 Scopus citations

Abstract

Observational learning and word-of-mouth are frequently confounded in online settings. Consumers purchase a product, enjoy it, and then refer others. In parallel, referral recipients observe a transmitter's interaction with the product and draw inferences about product quality. We aim to tease apart these effects using data on 42,000+ peer referrals at a leading crowdfunding platform. Our identification comes from the fact that referral transmitters can choose to conceal their prior contributions from public view, making observational learning impossible. We show that referrals are 30% more effective when the transmitter's past contributions are publicly visible. Moreover, visible prior contributions drive referral recipients to convert more quickly. Acknowledging the potential endogeneity of the referrer's decision to conceal contributions, we demonstrate the robustness of our results following propensity score matching and discuss the implications for crowdfunding and WOM referrals.

Original languageEnglish (US)
StatePublished - Jan 1 2014
Event35th International Conference on Information Systems: Building a Better World Through Information Systems, ICIS 2014 - Auckland, New Zealand
Duration: Dec 14 2014Dec 17 2014

Other

Other35th International Conference on Information Systems: Building a Better World Through Information Systems, ICIS 2014
CountryNew Zealand
CityAuckland
Period12/14/1412/17/14

Keywords

  • Crowdfunding
  • Electronic word of mouth
  • Observational learning
  • Peer referral

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