FOMO and the ICO: The changing salience of quality signals

Abstract

The manuscript investigates whether the individual personality trait, Fear of Missing Out (FOMO)—typically considered negative—influences the willingness of individuals to contribute to Initial Coin Offerings (ICOs), a phenomenon that emerged after the blockchain revolution. We conducted both qualitative and quantitative work in this space and present the results of an international survey, including a conjoint experiment. Theoretically, we anchor our study in signaling theory and propose that signal valence (the positive or negative interpretation of a signal) can diverge from signal intent. Specifically, we find that candidate ICO funders with strong FOMO behave predictably irrationally. They are more likely to invest in financially irresponsible projects and are less likely to invest in projects that have received recognition from established media sources or multinationals. While both financial responsibility and stakeholder recognition are ostensibly positive signals of team and project quality, we find that for ICO funders with high FOMO, the valence of these signals changes.