Nudges on Environmental Engagement: Evidence from Crowdfunding

Abstract

We study a platform policy of offering entrepreneurs an option to disclose environmental engagement (E-Commitment) using Kickstarter as a laboratory. After the policy rollout, 32.5% of entrepreneurs took up the disclosure option and their projects tend to attract out-of-state backers. Using the rollout as an instrumental variable for E-Commitment that addresses the endogenous nature of the variable, we find that the disclosure leads to 13.2% higher likelihood of funding success and 8.7% higher funding amount. We also observe a significant increase in the number of environmental conscious backers, new backers, and environmental related comments among these projects with disclosure of environmental engagement. Finally, we find little change in the likelihood of product delivery, but the minimum funding costs rise by 53.8% and the time from funding completion to product delivery stretches longer by 51%. Collectively, the evidence suggests: (1) Kickstarter’s nudge for environmental engagement enhances creators’ ability to attract environmental conscious, new backers; and (2) the environmental conscious backers’ funding decision is likely driven by non-financial, taste-based environmental motive.

For enquiries, please contact Ms. Heidi Lam at heidilam@cuhk.edu.hk.