What’s in a “Username”? The Effect of Perceived Anonymity on Herding in Crowdfunding

This research investigates whether and how predecessors’ usernames—as evaluated from a perspective of perceived anonymity—affect successors’ herding momentum through the varying extent of perceived source credibility. Using a unique data set collected from a leading debt-based crowdfunding platform, we classify lenders’ usernames as either anonymous or real-seeming, with the latter referring to usernames that seem to reveal one’s legal name. We find that successors demonstrate weaker herding momentum toward predecessors who are presented with real-seeming usernames than anonymous ones. This finding, which we attribute to a lower extent of perceived credibility resulting from a nonconforming behavior, challenges the conventional wisdom that considers anonymity a negative factor for source credibility. Further, we demonstrate the importance of risk-related factors, in that the uncovered positive effect of perceived anonymity on herding is accentuated in the early stage of the fundraising period. Our findings provide actionable insights for platform owners to utilize the user heterogeneity with respect to perceived anonymity and hence perceived credibility in herding. These findings are also informative for borrowers who desire to exert effort to encourage participation from the crowd. This research examines the role of perceived anonymity in shaping herding behavior in online crowdfunding markets. Drawing on theories from social psychology literature, we argue that a lender forms different credibility perceptions toward preceding peers based on their perceived anonymity state; the lender then uses such perceptions to adjust the lender’s herding momentum toward them. Using data collected from a leading debt-based crowdfunding platform, we classify an individual’s username as either anonymous or real-seeming, with the latter referring to as a user identification that seems to reveal one’s real name. The results show that successors demonstrate weaker herding momentum toward predecessors who are presented with real-seeming usernames than anonymous ones. This finding, which we attribute to a lower extent of perceived credibility derived from a nonconforming behavior, challenges the conventional wisdom that considers anonymity a negative factor for source credibility. We further show that the uncovered positive effect of perceived anonymity on herding is accentuated in the early stage of the fundraising period; nevertheless, we find no such discrepancies between