[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
Skip to main content

Trading Agent Kills Market Information

Evidence from Online Social Lending

  • Conference paper
Web and Internet Economics (WINE 2013)

Part of the book series: Lecture Notes in Computer Science ((LNISA,volume 8289))

Included in the following conference series:

Abstract

The proliferation of Internet technology has created numerous new markets as social coordination mechanisms, including those where human decision makers and computer algorithms interact. Because humans and computers differ in their capabilities to emit and process complex market signals, there is a need to understand the determinants of the provision of market information. We tackle the general research question from the perspective of new electronic credit markets. On online social lending platforms, loan applications typically contain detailed personal information of prospective borrowers next to hard facts, such as credit scores. We investigate whether a change of the market mechanism in the form of the introduction of an automated trading agent shifts the dynamics of information revelation from a high-effort norm to a low-effort information equilibrium. We test our hypothesis with a natural experiment on Smava.de and find strong support for our proposition.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Subscribe and save

Springer+ Basic
£29.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
GBP 19.95
Price includes VAT (United Kingdom)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
GBP 35.99
Price includes VAT (United Kingdom)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
GBP 44.99
Price includes VAT (United Kingdom)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Similar content being viewed by others

References

  1. Hayek, F.: The use of knowledge in society. American Economic Review 35(4), 519–530 (1945)

    Google Scholar 

  2. Böhme, R., Pötzsch, S.: Privacy in online social lending. In: Proc. of AAAI Spring Symposium on Intelligent Privacy Management, Palo Alto, CA, pp. 23–28 (2010)

    Google Scholar 

  3. Berger, S., Gleisner, F.: Emergence of financial intermediaries in electronic markets: The case of online P2P lending. BuR - Business Research 2(1), 39–65 (2009)

    Google Scholar 

  4. Herzenstein, M., Andrews, R., Dholakia, U., Lyandres, E.: The democratization of personal consumer loans? Determinants of success in online peer-to-peer lending communities (June 2008)

    Google Scholar 

  5. Varian, H.: Computer mediated transactions. American Economic Review 100(2), 1–10 (2010)

    Article  Google Scholar 

  6. Posner, R.: An economic theory of privacy. Regulation, 19–26 (1978)

    Google Scholar 

  7. Spence, M.: Job market signaling. The Quarterly Journal of Economics 87(3), 355–374 (1973)

    Article  Google Scholar 

  8. Malkiel, B.: The efficient market hypothesis and its critics. Journal of Economic Perspectives 17(1), 59–82 (2003)

    Article  Google Scholar 

  9. Chen, N., Ghosh, A., Lambert, N.: Social lending. In: Proc. of ACM EC, Palo Alto, CA, pp. 335–344 (2009)

    Google Scholar 

  10. Lin, R., Kraus, S.: Can automated agents proficiently negotiate with humans? Communications of the ACM 53(1), 78–88 (2010)

    Article  Google Scholar 

  11. Duffy, J.: Agent-based models and human-subject experiments. In: Judd, K., Tesfatsion, L. (eds.) Handbook of Computational Economics, vol. 2, pp. 949–1012. North Holland (2006)

    Google Scholar 

  12. Das, R., Hanson, J., Kephart, J., Tesauro, G.: Agent-human interactions in the continuous double auction. In: Proc. of IJCAI 2001, Seattle, WA, pp. 1169–1187 (2001)

    Google Scholar 

  13. Grossklags, J., Schmidt, C.: Software agents and market (in)efficiency - A human trader experiment. IEEE Transactions on System, Man, and Cybernetics: Part C 36(1), 56–67 (2006)

    Article  Google Scholar 

  14. Brill, A.: Peer-to-peer lending: Innovative access to credit and the consequences of Dodd–Frank (December 2010), http://www.aei.org/article/102873

  15. Howcroft, B., Lavis, J.: Image in retail banking. International Journal of Bank Marketing 4(4), 3–13 (1986)

    Article  Google Scholar 

  16. Gray, S.: Towards a theory of cultural influence on the development of accounting systems internationally. Abacus: A Journal of Accounting, Finance and Business Studies 24(1), 1–15 (1988)

    Article  Google Scholar 

  17. Meyer, T.: Innovations in P2P lending may put computers over people: Welcome to the machine (November 2009), http://www.dbresearch.de/

  18. Klafft, M.: Online peer-to-peer lending: A lenders’ perspective. In: Proceedings of the International Conference on E-Learning, E-Business, Enterprise Information Systems, and E-Government, pp. 371–375 (2008)

    Google Scholar 

  19. Bar-Gill, O., Warren, E.: Making credit safer. University of Pennsylvania Law Review 157(1), 1–101 (2008)

    Google Scholar 

  20. de Meza, D.: Overlending? The Economic Journal 112(477), 17–31 (2002)

    Article  Google Scholar 

  21. Jentzsch, N.: Financial Privacy. Springer, Heidelberg (2007)

    Google Scholar 

  22. Ceyhan, S., Shi, X., Leskovec, J.: Dynamics of bidding in a P2P lending service: Effects of herding and predicting loan success. In: Proc. of ACM WWW (2011)

    Google Scholar 

  23. Shen, D., Krumme, C., Lippman, A.: Follow the profit or the herd? Exploring social effects in peer-to-peer lending. In: Proc. of IEEE SocialCom, pp. 137–144 (2010)

    Google Scholar 

  24. Böhme, R., Pötzsch, S.: Collective exposure: Peer effects in voluntary disclosure of personal data. In: Danezis, G. (ed.) FC 2011. LNCS, vol. 7035, pp. 1–15. Springer, Heidelberg (2012)

    Chapter  Google Scholar 

  25. Zhong, C., DeVoe, S.: You are how you eat: Fast food and impatience. Psychological Science 21(5), 619–622 (2011)

    Article  Google Scholar 

  26. Young, P.: Social norms. In: Durlauf, S., Blume, L. (eds.) The New Palgrave Dictionary of Economics, Second Edition, 2nd edn. Palgrave Macmillan (2008)

    Google Scholar 

  27. Selten, R.: What is bounded rationality? In: Gigerenzer, G., Selten, R. (eds.) Bounded Rationality: The Adaptive Toolbox, pp. 13–36. MIT Press (2001)

    Google Scholar 

  28. Weiss, G., Pelger, K., Horsch, A.: Mitigating adverse selection in P2P lending – Empirical evidence from Prosper.com (July 2010)

    Google Scholar 

  29. Schelling, T.: The Strategy of Conflict. Oxford University Press, Oxford (1965)

    Google Scholar 

  30. Pope, D., Syndor, J.: What’s in a picture? Evidence of discrimination from Prosper.com. Journal of Human Resources 46(1), 53–92 (2011)

    Article  Google Scholar 

  31. Karlan, D., Zinman, J.: Observing unobservables: Identifying information asymmetries with a consumer credit field experiment. Econometrica 77(6), 1993–2008 (2009)

    Article  Google Scholar 

  32. Eisenbeis, H.: The government crackdown on peer-to-peer lending. The Big Money (March 2009)

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2013 Springer-Verlag Berlin Heidelberg

About this paper

Cite this paper

Böhme, R., Grossklags, J. (2013). Trading Agent Kills Market Information. In: Chen, Y., Immorlica, N. (eds) Web and Internet Economics. WINE 2013. Lecture Notes in Computer Science, vol 8289. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-45046-4_7

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-45046-4_7

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-45045-7

  • Online ISBN: 978-3-642-45046-4

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics