Crowdfunding as gambling: evidence from repeated natural experiments
Date
2021-02-26
Authors
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Source Title
Journal of Corporate Finance
Print ISSN
0929-1199
Electronic ISSN
1872-6313
Publisher
Elsevier
Volume
77
Issue
Pages
1 - 27
Language
English
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Abstract
Lenders in Prosper, one of the largest lending markets in the U.S., reduce their activity when playing multistate Powerball or Mega Millions lottery jackpot becomes attractive. This finding suggests that the desire for sensation seeking is an underlying motivation for participating in peer-to-peer crowdfunding markets; the thrill of winning a large lottery jackpot fulfills some lenders' desire for novelty and sensation seeking, thus decreasing their lending activity. We discuss our findings' implications for lenders, borrowers, platform organizers, and policymakers. © 2021 Elsevier B.V.