Viewing crowdfunding from a behavioral finance perspective: How do the Danish investors behave, and which precautions can they take to avoid their behavioral biases?

Tino Valsø

Student thesis: Master thesis


The purpose of this thesis is to examine the Danish investors’ behavior from a behavioral finance point of view and thereafter suggest which precautions the investors can take to avoid the presented behavioral biases. The present thesis has established some hypotheses based on the selected behavioral finance theory, where the following heuristics and biases are examined: Representativeness and availability, familiarity, confirmation bias, anchoring, and herd behavior. Data that consists of a questionnaire and three telephone interviews with three interviewees with different experience and backgrounds have been collected to examine the purpose of the thesis and the hypotheses. Furthermore the results from part of another questionnaire have been included as secondary data. The findings show that majority of the investors in this thesis show signs of familiarity and anchoring. However, the results also show that the hypotheses about representativeness and availability, confirmation bias and herd behavior are all rejected. Especially herd behavior seems to be a major topic within crowdfunding and some of the related research splits it into rational and irrational herding. Thus, the present thesis applies this view to the minority of the investors who shows sign of herd behavior, and finds that rational herding were found to fit best. Finally, this thesis concludes that precautions like a thorough information research and a “dissenting voice of reason” can be decent to apply in order to avoid the mentioned biases However, it is a fine balance between the time-consuming research and the timesaving heuristics. The soundest advice for the investors is to always do your homework before following any trend.

EducationsMSc in Advanced Economics and Finance, (Graduate Programme) Final Thesis
Publication date2017
Number of pages84