Rational Herding in Microloan Markets

Microloan markets allow individual borrowers to raise funding from multiple individual lenders. We use a unique panel data set that tracks the funding dynamics of borrower listings on Prosper.com, the largest microloan market in the United States. We find evidence of rational herding among lenders. Well-funded borrower listings tend to attract more funding after we control for unobserved listing heterogeneity and payoff externalities. Moreover, instead of passively mimicking their peers (irrational herding), lenders engage in active observational learning (rational herding); they infer the creditworthiness of borrowers by observing peer lending decisions and use publicly observable borrower characteristics to moderate their inferences. Counterintuitively, obvious defects (e.g., poor credit grades) amplify a listing's herding momentum, as lenders infer superior creditworthiness to justify the herd. Similarly, favorable borrower characteristics (e.g., friend endorsements) weaken the herding effect, as lenders attribute herding to these observable merits. Follow-up analysis shows that rational herding beats irrational herding in predicting loan performance

Decreased basal, noninsulin-stimulated glucose uptake and metabolism by skeletal soleus muscle isolated from obese-hyperglycemic (ob/ob) mice.

Insulin resistance of diaphragms of ob/ob mice has been repeatedly demonstrated previously both in vitro and in vivo. In the present study, transport and metabolism of glucose with and without insulin stimulation were compared in a skeletal muscle more likely than diaphragm or heart to be representative of the overall striated muscle mass, i.e. isolated soleus muscle. Compared with soleus muscle from lean controls, unstimulated lactate release in the presence of exogenous glucose was depressed from 16.2 to 12.3 nmol/60 min per mg wet wt in soleus from ob/ob mutants; glycolysis was decreased from 6.6 to 3.7 and [14C]glucose oxidation to 14CO2 from 0.90 to 0.33 nmol glucose/60 min per mg wet wt. Uptake of 2-deoxyglucose (2-DOG), both with and without insulin, was very much less for soleus from ob/ob than from lean mice, at 2-DOG concentrations ranging from 0.1 to 10 mM, and in mice of 6-15 wk. When 2-DOG concentration was 1 mM, its basal uptake was 0.53 nmol/30 min per mg wet wt for soleus of ob/ob as against 0.96 for soleus of lean mice. The absolute increment due to 1 mU/ml insulin was 0.49 in muscle of ob/ob as against 1.21 in that of lean mice. When the resistance to insulin action was decreased by pretreatment in vivo by either streptozotocin injection or fasting, the decreased basal 2-DOG uptake of subsequently isolated soleus muscle was not improved. Inhibition of endogenous oxidation of fatty acids by 2-bromostearate, while greatly increasing 14CO2 production from [14C]glucose, did not affect basal [5-3H]glucose metabolism or 2-DOG uptake. It is suggested that transport and/or phosphorylation of glucose under basal, unstimulated conditions are depressed in soleus muscle of ob/ob mice, whether or not resistance to insulin and hyperinsulinemia are also present. Although the origin of the decreased basal glucose uptake remains unknown it might be related to a similar decrease in basal glucose uptake by ventromedial hypothalamic cells, an event presumably resulting in a tendency to hyperphagia. Decreased basal glucose uptake by soleus muscle of ob/ob mice might explain the hyperglycemia, and hence partly the hyperinsulinemia and excessive fat deposition of those animals