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Information Asymmetry Among Investors and Strategic Bidding in Peer-to-Peer Lending

We study how investors in peer-to-peer (P2P) lending use their information advantages in decisions on when to place bids. Literature documents that better-informed bidders may withhold bidding until the last moment (i.e., “sniping”) to avoid competition. We argue that, because a collective effort from investors is required in P2P lending, it could be optimal for informed investors to bid early in projects with a low probability of being funded with the purpose of signaling the quality of these projects. With a unique data set from Prosper.com, we use a matching analysis to show that, for projects with low credit grades, the probability of being successfully funded is positively correlated with early bids from informed investors. For funded loans, informed investors are more likely to bid in the early stage than uninformed investors, whereas uninformed investors will follow and bid at the late stage. Finally, there are more early bids from informed investors for “good” loans than for “bad” loans, indicating that the bids are informative for the quality of those projects. Our findings have important implications for managing the information asymmetry and strategic behaviors among investors on P2P lending platforms.

Ketersediaan

Informasi Detail

Judul Seri

INFORMATION SYSTEMS RESEARCH; Vol.33 No.3 September 2022

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 824-845

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

INFORMATION ASYMMETRY
ONLINE AUCTIONS
PEER-TO-PEER LENDING
SQUATTING
SNIPING

Info Detail Spesifik

https://doi.org/10.1287/isre.2021.1084

Pernyataan Tanggungjawab

Kai Lu, Zaiyan Wei, Tat Y. Chan

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