Jiayu Yao

Ph.D. Candidate, ITM

Scheller College of Business

Georgia Institute of Technology

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Area: ITM

Committee Members: Dr. Mingfeng Lin (Chair), Dr. D.J. Wu, Dr. Sridhar Narasimhan, Dr. Han Zhang, Dr. Xuan Wei (Shanghai Jiao Tong University)

Title: Essays on the Wisdom of the Crowd in Crowdfunding

Abstract:

The rapidly growing crowdfunding has redefined financial behaviors and revolutionized traditional industries such as banking. My dissertation studies crowd behaviors in online crowdfunding and the impact of crowdfunding on entrepreneurial development. In my first essay, I propose several easily scalable variables derived from the heterogeneity of investors’ bids in terms of size and timing. I show that loans funded with larger bids relative to the typical bid amount in the market, or to the bidder’s historical baseline, particularly early in the bidding period, are less likely to default. More importantly, these variables improve the predictive performance of state-of-the-art models that have been proposed in this context. In my second essay, I study the impact of peer behavior information display on lenders’ decision-making in crowdfunding. Utilizing two online controlled experiments and a real-world dataset, I examine lenders’ platform abandonment, decision time, investment willingness, and risk preference under different display formats of peer information. The results highlight the advantages of aggregated peer information: Compared with completely no peer information or extensive peer information, a moderate amount of peer information saves lenders’ decision time, increases participation rate, amplifies risk preference, and supports investment decision-making. In my third essay, I study if and how crowdfunding’s nonfinancial crowd value helps entrepreneurs enter mass markets and improve market performance. I build explanatory machine learning models to predict entrepreneurs’ market success using financial and non-financial factors of entrepreneurs’ crowdfunding campaigns. Preliminary results suggest that early customers’ feedback and entrepreneurs’ responses play important roles in mass market launch and success. Taken together, my three essays contribute to a better understanding of crowd behavior in crowdfunding and its value.