Social Network Effect on Bidding Strategy Adoption in Online P2P Lending Market

Bidding strategy in online auctions, as a sort of strategic behavior, can help bidders to get what they want more efficiently and effectively. It receives much attention in many researches. However, the determinants of bidding strategy adoption still remain unclear. In this study, we investigate the role of social network in bidding strategy adoption using real transaction data from an online P2P lending market. The analyses reveal that 1) bidding strategy tends to be homogeneous in different online social networks. 2) Joining an online social network does not change the bidding strategy adoption behavior significantly. 3) The size of social network will affect bidding strategy adoption and smaller ones are more homogeneous than bigger ones. 4) In a social network, bidders with different roles have different preferences on bidding strategies. Our findings can be considered as important empirical evidences for theories about social influence and human behavior

PERSPECTIVES ON COMPETITIVE BIDDING: RETIREMENT OF ENVIRONMENTALLY SENSITIVE FARMLAND

The USDA has used bidding to enroll land into the Conservation Reserve Program (CRP) and may use similar mechanisms to implement other policy instruments in which some or all agricultural land cropping rights are acquired to protect or increase environmental amenities. Experience with the CRP suggests that current enrollees are being compensated in excess of the lowest payment they would be willing to accept in exchange for loss of cropping rights. While it may be prohibitively expensive to estimate such reservation prices on all potential CRP parcels, it is likewise difficult to design a bidding mechanism that induces landowners to reveal these values. While the competitive bidding and contingent valuation literatures provide some guidance, the problem of designing a cost effective bidding mechanism for land retirement does not conform precisely to situations in which theoretical, experimental or case study results have been reported. Despite this, realistic incremental changes in the CRP's current bidding mechanism that induce competitive behavior among bidders appear to portend significant savings in government outlays.Land Economics/Use,

How to Design Online Models for Micro-lending in Developing Countries? Making Sense to MYC4 in Africa

This article explores a micro-lending platform linking investors mostly located in developed countries and micro-entrepreneurs located in Africa. At the heart of this social and economic innovation is the online auction model, a concept that has been intensively investigated and used in developed countries. However, little knowledge exists about how these new models are used and implemented in developing countries, and about how existing theories are able to explain such an emerging innovative phenomenon. The article makes two main contributions. First, it applies a theoretical pluralist approach to further improve our understanding of MYC4, an online auction model for micro-lending purposes being applied in Africa and selected as our case study. Secondly, it uses the understanding produced from data analysis of MYC4 to validate propositions derived from three theoretical approaches. Our analysis shows that the three theoretical approaches differ in their basic assumptions – critical dimensions – and in the usefulness of their propositions, two of them being more valuable than the third one for drawing up guidelines for designing and implementing online auction markets and for identifying implications regarding the role of information, technology and the stakeholders involved

The use of asset management companies in the resolution of banking crises - cross-country experience

Asset management companies have been used to address the overhang of bad debt in the financial system. There are two main types of asset management company: those set up to expedite corporate restructuring and those established for rapid disposal of assets. A review of seven asset management companies reveals a mixed record. In two of three cases, asset management companies for corporate restructuring did not achieve their narrow goal of expediting bank or corporate restructuring, suggesting that they are not good vehicles for expediting corporate restructuring. Only a Swedish asset management company successfully managed its portfolio, acting sometimes as lead agent in restructuring - and helped by the fact that the assets acquired had mostly to do with real estate, not manufacturing, which is harder to restructure, and represented a small fraction of the banking system's assets, which made it easier for the company to remain independent of political pressures and to sell assets back to the private sector. Asset management companies used to dispose of assets, rapidly fared somewhat better. Two of four agencies (in Spain and the United States) achieved their objectives, suggesting that asset management companies can be used effectively for narrowly defined purposes of resolving insolvent and inviable financial institutions, and selling off their assets. Achieving these objectives required an easily liquefiable asset - real estate - mostly professional management, political independence, adequate bankruptcy, and foreclosure laws, appropriate funding, skilled resources, good information and management systems, and transparent operations and processes. The other two agencies (in Mexico and the Philippines) were doomed from the start, as governments transferred to them politically motivated loans or fraudulent assets, which were difficult for a government agency susceptible to political pressure and lacking independence to resolve or sell off.Banks&Banking Reform,International Terrorism&Counterterrorism,Financial Crisis Management&Restructuring,Payment Systems&Infrastructure,Municipal Financial Management,Financial Crisis Management&Restructuring,International Terrorism&Counterterrorism,Municipal Financial Management,Financial Intermediation,Banks&Banking Reform

Mobilizing a pluralist theoretical approach to understand microlending digital platforms: the AfricaMC case

Purpose – This study aims to explore how a microlending digital platform connects social investors in developed countries and micro-entrepreneurs in Africa. However, additional research is necessary to discuss how online auction models are designed and implemented and how existing theories can explain their use in the so-called developing countries. Design/methodology/approach – The research is based on a single case study: an online auction model for microlending named AfricaMC. Two main methods collected empirical data, namely, online participant observation, i.e. real-time participation in the online auction market and in the forum of discussions, where the authors observed the processes of microlending transactions as registered members; analysis of online documents, by reviewing forum discussions, analyzing reports, blogs, chats and other materials. Findings – The results suggest that using sociological and information systems theoretical lenses in a complementary manner could provide greater value than using economics. Originality/value – The study makes two main contributions. First, it mobilizes a pluralist theoretical approach based on economic, sociological and information systems perspectives to improve the understanding of microlending digital platforms using online auction models. Second, it uses the understanding produced from data analysis of one particular African case to validate propositions derived from these three theoretical approaches that might be applied to other case

Is the ’Linkage Principle’ Valid?: Evidence from the Field

revenue comparison, auction choice, linkage principle, used-car auctions

Strateginen päätöksenteko Internet-huutokaupoissa: Prosper.com kuluttajien välinen lainahuutokauppa

In this study, the strategic decision making in online auctions is examined with real-life data from Prosper.com people-to-people lending site. On this site lenders bid for borrowers' loan listings and the winners get to fund the loan at an interest rate determined by the auction. The exceptionally large empirical database provided by Prosper.com offers a unique opportunity to test and further develop the theory on online auctions. Moreover, acquiring deeper knowledge on bidding behavior in online auctions helps the auctioneers to develop better auction designs. This study shows that bidding behavior is not homogeneous among online bidders as the traditional auction theory would suggest. Instead, there are many different bidding strategies that can be identified from real-life bidding data on Prosper.com. In total, 9 different strategies were identified, but three of them were most commonly followed. In the Evaluator strategy people make only one bid, but at an early point in the auction and significantly below the maximum accepted bid. Up to 33% of all bidders used this strategy. Another popular strategy is Late Bidding, where bidders place one bid very late in the auction. This strategy was used by 25% of all bidders. The third major strategy involves multiple bids made during the auction. Commonly, the final bid is made late, which means that the bidder starts early but follows the auction all the way through. This Multi-Bid strategy was followed by 15% of all bidders. The motivation behind the different strategies is discussed in the light of existing literature on auction theory and bidding behavior. After identifying the different bidding strategies, the tables are turned and the strategic decision making of the sellers, i.e. the borrowers, is examined. In this context a Borrower Decision Aid is developed, which helps the borrower to quantify her strategic options in terms of success probabilities and estimated final interest rates. The tool enables the borrower to test different listing parameters, such as starting rate and loan amount, and see how changes in these parameters affect the outcome of the auction. The tool analyzes similar real-life listings on Prosper.com and estimates the success probability and final interest rate based on the given listing parameters.Tässä diplomityössä tutkitaan ihmisten strategista päätöksentekoa Internet-huutokaupoissa. Tutkimuksen aineistona hyödynnetään historiadataa Prosper.com huutokauppasivustolta, joka on erikoistunut huutokauppaamaan kuluttajien välisiä luottoja. Sivustolla tavalliset ihmiset tekevät tarjouksia muiden tekemiin lainahakemuksiin ja huutokaupan voittajat rahoittavat kyseisen lainan korolla, joka määräytyy huutokaupassa. Prosper.comin poikkeuksellisen laaja empiirinen tietomäärä mahdollistaa nykyisen huutokauppateorian tutkimisen käytännössä. Syvempää tietämystä ihmisten strategisesta käyttäytymisestä huutokaupoissa voidaan lisäksi hyödyntää entistä parempien huutokauppamekanismien kehittämisessä. Tämä tutkimus osoittaa, että ihmisten käyttäytyminen Internet-huutokaupoissa ei ole homogeenista, kuten perinteinen huutokauppateoria antaisi olettaa. Päinvastoin aineistosta on löydettävissä useita erilaisia strategioita, joita ihmiset käyttävät tehdessään tarjouksia. Tässä tutkimuksessa löydettiin yhteensä yhdeksän erilaista strategiaa, joista kuitenkin kolme erottui selvästi muista. Evaluator (arviointi) -strategiaa noudattavat ihmiset tekevät vain yhden tarjouksen, mutta aikaisessa vaiheessa huutokauppaa ja tarjouksen korko on merkittävästi alle sen hetkisen suurimman sallitun koron. Jopa 33% kaikista osallistujista käyttävät tätä strategiaa. Seuraavaksi suosituin strategia on Late Bidding (myöhäis) -strategia, joka tarkoittaa sitä, että osallistuja tekee yhden tarjouksen mutta vasta vain hetkeä ennen huutokaupan päättymistä. Tätä strategiaa käyttää 25% osallistujista. Kolmatta merkittävää strategiaa noudattavat ihmiset tekevät useita tarjouksia yhdessä huutokaupassa. Usein viimeinen tarjous on tehty hyvin myöhään. Niinpä nämä ihmiset aloittavat tarjoamisen aikaisin ja seuraavat huutokaupan kehittymistä aina loppuun asti. Tätä Multi-Bid (usean tarjouksen) -strategiaa harjoittaa 12% kaikista osallistujista. Tutkimuksessa myös pohditaan nykyisen teoria- ja empiriatutkimuksen valossa eri strategioiden hyötyjä ja syitä. Strategista päätöksentekoa tutkitaan myös lainanottajien kannalta. Tässä yhteydessä kehitetään Borrower Decision Aid niminen Internet-pohjainen päätöksentekotyökalu. Työkalu auttaa lainanottajaa arvioimaan hänen strategisia vaihtoehtojaan lainan onnistumistodennäköisyyden ja lainakoron suhteen. Työkalulla lainanottaja voi kokeilla erilaisia lainaparametreja ja nähdä kuinka huutokaupan lopputulos muuttuu. Työkalu perustuu samankaltaisiin lainoihin Prosper.com-sivustolla ja estimoi lainan onnistumistodennäköisyyden ja lopullisen lainakoron annetuilla lainaparametreilla

On the Asymptotic Distribution of the Transaction Price in a Clock Model of a Multi-Unit, Oral, Ascending-Price Auction within the Common-Value Paradigm

Using a clock model of a multi-unit, oral, ascending-price auction, within the commonvalue paradigm, we analyse the asymptotic behaviour of the　transaction price as the number of bidders gets large. We find that even though the transaction price is determined by a (potentially small) fraction of losing drop-out bids, that price converges in probability to the ex ante unknown, true value. Subsequently, we derive the asymptotic distribution of the transaction price. Finally, we apply our methods to data from an auction of taxi license plates held in Shenzhen, China.common value, information aggregation, multi-unit auctions, taxis