A Study Reveals the Impact of Trustworthy Appearance on Crypto ICO Funding
A recent study conducted by the Hanken School of Economics in Helsinki, Finland, has found that having a trustworthy appearance can significantly increase investor funding in crypto initial coin offerings (ICOs) by 95%. ICOs are fundraising events for new cryptocurrency-related products or services.
How Team Members’ Looks Influence Investor Decisions
The study, led by Professor Sinh Toi Moi, utilized machine learning to analyze the facial features of individuals involved in 5,826 ICOs. The research aimed to understand how these traits affect perceived trustworthiness. The results revealed that ICOs with team members in the top quintile of trustworthiness raised an average of $2.91 million more compared to those in the bottom quintile.
The Downside of Trustworthiness
However, while facial trustworthiness had positive effects for some ICOs, it did not always benefit investors. The study found a negative correlation between facial trustworthiness and post-ICO token cumulative return, including factors like survival, listing on exchanges, employment, and code development activity. This suggests that investors who overvalued ICOs during the fundraising period may try to reverse their investments later on.
The Less Information, The Better
The study also highlighted that individual investors may rely on facial trustworthiness when they have limited understanding of technical aspects related to ICOs. They compensate for their lack of knowledge by using easily available information about team members’ trustworthiness. This reliance on facial impressions is stronger when ICOs provide less code information on GitHub or have complex white papers.
The findings of this study shed light on the potential biases and behavioral tendencies that investors may have when making investment decisions in the crypto ICO market.
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