Infectious Confidence: Unraveling the Effects of Confidence Contagion on Overfunding in Equity Crowdfunding
Authors: Li, Yijing; Liu, Fei; Lim, Eric T. K.; Tan, Chee-Wee; Liu, Yong
Journal: MIS Quarterly (2024)
<jats:p>Equity crowdfunding campaign overfunding occurs when a campaign generates funds in excess of the funding goal and has hence been touted as the mark of an extraordinarily successful campaign. However, a novel theoretical lens is needed to comprehend funders’ enthusiasm in their support of such campaigns. Building on the extant literature on contagion effect, we constructed a research model that posits confidence contagion invoked by confidence cues embedded in campaign materials as a key driver of overfunding. Our hypotheses were validated in two complementary empirical studies. In Study 1, we manipulated confidence cues in a controlled experiment to verify the activation of confidence contagion at the individual level. Analytical results indicate that individual funders detect self-confidence traits from confidence cues embedded in campaign materials and assimilate the fundraiser’s confidence via a spontaneous social appraisal mechanism. In turn, confidence contagion drives funders to congregate and invest in campaigns. In Study 2, we analyzed a secondary dataset collected from a leading equity crowdfunding platform to discern how confidence contagion drives overfunding at…