Wisdom of the Crowd? It’s Complicated

Thursday, June 17, 2021

While the global COVID-19 pandemic has greatly limited our ability to gather, physically, in crowds, nothing has stopped people from gathering in virtual spaces of all kinds. From social media to crowdfunding new ideas to crowdsourcing information, the wisdom shared by the many is still as popular as ever.

Researchers in the Carlson School’s Information & Decision Sciences department are looking into aspects of these crowds: where they form, how they work, and what impact they have on our lives. Recent, newly-published studies have uncovered information that companies and people should heed moving forward.

Facebook “Reactions” Lead to More Engagement

Believe it or not, the ability to like, love, care, laugh, say wow, be sad or angry on Facebook posts has been around since 2016. These “Reactions” to user-generated posts on Facebook business pages, according to Carlson School researchers in an article published in ACM Transactions on Computer-Human Interaction, have led to more engagement overall, including more Likes and Comments, than before the “Reactions” feature was introduced. The increased engagement did not affect all posts equally; instead it was “rich getting richer” with posts that received no engagement continuing to go unnoticed. The researchers—Assistant Professor Mochen Yang, Associate Professor Yuqing Ren, and Professor Gediminas Adomavicius—advice for organizations: "the introduction of new design features may have sophisticated, unintended, consequences on user behaviors." Take note, social media managers and platform designers!

Mobile App Use Grows with Crowdsourcing Features

How many apps are on your phone? It’s likely “too many” for a lot of us, which means we’re not using apps consistently. App developers, of course, want to change that. According to Carlson School research, introducing crowdsourcing features can help. In a forthcoming Management Science article, researchers Zhuojun Gu (a former Carlson School PhD student now at the University of Texas Arlington), Carlson School Professor Ravi Bapna, Associate Professor Jason Chan, and Professor Alok Gupta tested two features: the ability to submit content and the ability to access crowdsourced content. Through a randomized control trial, they found “that content submission significantly increases user engagement (+11%) and retention (+14%).” However, accessing crowdsourced content only had a positive effect on retention (+13%). Surprisingly, offering these features together leads to lower engagement since one user’s submission is crowded out by others.

We Listen to Our Friends’ Online Reviews

If your friend posts a restaurant review on Yelp, you are three times more likely to post a review when you visit that same restaurant. Further, your review will be of a “higher quality, longer, and more novel” than what your friend wrote. That’s according to research from Carlson School Professor De Liu and colleagues published in Information Systems Research. The authors also found that these types of reviews have a stronger effect on less-experienced users and less-reviewed products/services. Why is this the case? Competitive altruism, which “holds that the pursuit of status can motivate altruistic contributions.” Next time you’re searching for a restaurant, just see where your friends have been and everyone wins!

Let the Crowd Vote!

Liu, joined by Liang Chen of West Texas A&M University and Pei Xu of Auburn University, also recently studied the effects of crowd voting on participation in crowdsourcing contests. The article was published in the Journal of Management Information Systems. When compared to the usual contest design for judging creative works -using experts to rate entries- the researchers found more people participate when contests offer the crowd a chance to vote. “Specifically, every 10 percent increase in the crowd-voting reliance can boost users’ odds of participation by about seven percent.” The researchers note that these two approaches -crowd voting and expert rating- are not mutually exclusive, and “having a mix of expert-rated and crowd-voted prizes may allow the sponsor to strike a balance between attracting elite contestants and having broader participation.”

More Funds for More Projects

A new model from Carlson School researcher Yicheng Song and colleagues would increase the number of projects funded on the popular crowdfunding website By maximizing weekly total funding, the model would have “raised 2.5% more donation, provided 9% more funding to more viable projects, funded 17% more projects, and provided 15% more utility to the donors than the current system.” Published in Management Science, the researchers say that by focusing on the weekly funding totals, donors are better served over time. This model is based on a structural econometric model of utility-maximizing donors who can derive both altruistic (from the welfare of others) and egoistic (from personal motivations) utilities from donating—a unique feature of philanthropic giving.

Gender Gaps in Equity Crowdfunding

Raising capital is challenging. That’s especially true for women. But, equity crowdfunding (which allows all individuals to purchase securities in private firms through online platforms) might be a promising avenue for women seeking capital. Research by Carlson School Assistant Professor Sofia Bapna and Associate Professor Martin Ganco of the University of Wisconsin-Madison published in Management Science finds that in equity crowdfunding, the founder’s gender makes little difference on investors’ interest in investing in a venture. Male investors were as likely to be interested in ventures founded by females as those founded by males. Female investors showed a slight preference for ventures founded by females but this was mainly driven by less-experienced investors. These findings suggest the gender gaps found in traditional equity financing may be ameliorated in the equity crowdfunding context.

This article appeared in the Summer 2021 Discovery magazine

In this issue, Carlson School faculty research studies the wisdom of the crowds, the role of religion in the gender wage gap, the impact of cash injections, and highlights many others areas where our research has had an important impact.

Summer 2021 table of contents