Brain activity can forecast success of crowd-funded projects Tuesday, 7 November 2017
Determining how well a crowdfunded project will be received by the ‘crowd’ has traditionally been done through surveys and polls. Research by Alexander Genevsky of Rotterdam School of Management, Erasmus University (RSM) and a team of researchers now finds that scanning brain activity can make predictions of individual choices more accurate. But more importantly, the study also discovered that activity in one area of the brain can forecast the success of crowdfunded projects on the internet more reliably than the answers people give.
“Crowd-funding is an increasingly popular method to raise money for the development of all kinds of products”, says Genevsky. “Between films and games, tech products, and even entire startups, in 2015 over 34 Billion Dollar was raised world-wide for crowd-funded projects.”
“For marketing researchers, it is important to know how and why are people are triggered to make their funding decisions”, says Genevsky. To find out, researchers have traditionally asked people about their choices through surveys. However, self-reporting of preference is often prone to all kinds of biases and social influences. That’s why in this study, the researchers decided to also perform brain scans to see if this improves predictions about people’s crowdfunding behaviour.
In the experiment, the team of researchers showed 30 participants a series of 36 actual crowd-funding pitches for documentary films on the Kickstarter website. Meanwhile, the researchers scanned their brain activity in an fMRI scanner.
While in the scanner, people were asked to indicate which documentary they would contribute to. These were real funding decisions; participants knew that their preferred films might get funded and that this might take a cut from money they would otherwise receive. In a later stage, participants were also surveyed about their choices.
The results showed that individual funding choices can be predicted by activity in two areas in the brain (the Nucleus Accumbens and the Medial Prefrontal Cortex). In other words, by scanning people’s brains the researchers were able to predict their funding decisions, even before they were asked to indicate their decision in a survey.
More interestingly, the researchers also found that activity in one of those brain areas in particular, the Nucleus Accumbens, can forecast if an entire project will be successful weeks, or even months later on the actual crowd-funding website.
The brain knows better
And this neural activity proved to be a more accurate forecaster than the answers that people gave in their surveys, the researchers discovered. “In a sense, it appears that the brain knows better what the market will bear than we are able or willing to report ourselves”, Genevsky says.
These results have the potential to change market research of crowd-funded projects. By studying how much activity a funding proposal triggers in this part of the brain in just a limited number of people, we can improve forecasts of the success of these projects in the real-world.
“For the field of marketing at large, this means that a time is approaching when neural information may reliably improve marketing decisions”, Genevsky says. “And in some cases, as here, may even surpass what’s possible with today’s traditional methods.”-
Read the paper here: Alexander Genevsky, Carolyn Yoon and Brian Knutson, Journal of Neuroscience 3 August 2017, 1633-16
Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China. www.rsm.nl
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