Graduation Year

2015

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Joshua Rosett

Reader 2

Roberto Pedace

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2015 Sarah H. Chung

Abstract

With the rise of technology and finance, crowdfunding has been uprising as a popular method of financing projects. Kickstarter provides an online platform in which anyone with Internet access can upload their own project “pitch” to gain funding for their idea on an all-or-nothing model. My thesis explores financial trends and factors that potentially contribute to a successful Kickstarter campaign within the classical music projects subcategory. I use a logistic regression and the Ordinary Least Squares model to examine a dataset of already successfully funded projects and a second dataset that contains both successfully and unsuccessfully funded projects that were tracked over a period of time. Additionally, I collected text files of the word content on all projects to identify most frequently utilized words for the successful and unsuccessful files.

Controlling for other characteristics, the key findings are that projects with higher target funding levels are both less likely to fund and fund at a lower percentage of the target, projects receiving more comments are more likely to fund, and projects proposed by those that fund other projects are more likely to fund. In addition, certain words are correlated with success or failure. However, since the method of identifying important words used data mining rather than just testing, we cannot predict that these words would increase the likelihood of success in future projects. Due to limited sample size and high correlations among the variables in specifications including both the project characteristics and words, the main results for each set of explanatory variables used separately tend to become statistically insignificant.

Additionally, the funding pattern over time appears not to exhibit the herding behavior found in some asset pricing markets. This is an interesting finding given the highly social nature of funding via Kickstarter.

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