Not Just a Name: The Moderating Effect of Online Identity on Herding

Abstract

This research examines the role of perceived anonymity in shaping herding behavior in 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; she then uses such perceptions to adjust her herding momentum toward them. Using a unique data set collected from a leading debt-based crowdfunding platform, we classify individuals’ usernames as either anonymous or real-seeming, with the latter referring to a username that seems to reveal one’s legal 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 derives from a non-conforming 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 listings that are assigned with high-risk and low-risk credit grades. Our study contributes to the literatures dealing with anonymity and herding in online environments.