Accelerating information revelation in ascending-bid auctions: avoiding last minute bidding
Proceedings of the 3rd ACM conference on Electronic Commerce
Frictionless Commerce? A Comparison of Internet and Conventional Retailers
Management Science
When Rational Sellers Face Nonrational Buyers: Evidence from Herding on eBay
Management Science
Lending Behavior and Community Structure in an Online Peer-to-Peer Economic Network
CSE '09 Proceedings of the 2009 International Conference on Computational Science and Engineering - Volume 04
Social interactions in P2P lending
Proceedings of the 3rd Workshop on Social Network Mining and Analysis
Proceedings of the 14th Annual International Conference on Electronic Commerce
Electronic Commerce Research and Applications
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We study lender behavior in the peer-to-peer (P2P) lending market, where individuals bid on unsecured microloans requested by other individual borrowers. Online P2P exchanges are growing, but lenders in this market are not professional investors. In addition, lenders have to take big risks because loans in P2P lending are granted without collateral. While the P2P lending market shares some characteristics of online markets with respect to herding behavior, it also has characteristics that may discourage it. This study empirically investigates herding behavior in the P2P lending market where seemingly conflicting conditions and features of herding are present. Using a large sample of daily data from one of the largest P2P lending platforms in Korea, we find strong evidence of herding and its diminishing marginal effect as bidding advances. We employ a multinomial logit market-share model in which relevant variables from prior studies on P2P lending are assessed.