IDEAS home Printed from https://ideas.repec.org/p/bir/birmec/20-10.html
   My bibliography  Save this paper

Expert Imitation in P2P Markets

Author

Listed:
  • Ge Gao

    (University of Birmingham)

  • Mustafa Caglayan

    (Heriot-Watt University)

  • Yuelei Li

    (Tianjin University)

  • Oleksandr Talavera

    (University of Birmingham)

Abstract

This paper investigates expert bidding imitation in peer-to-peer lending platforms. We employ data from Renrendai.com, which contains information about 169,779 investors who placed 3,947,996 bids on 111,284 loan listings from 2010 to 2018. The experts are defined as investors who either have more central roles or who spend more time or money on the network. We find that an average investor mimics the bids of expert lenders. Inactive lenders learn top investors' lending behaviour through observational learning and then follow their actions, although they do not know the experts' identity. Finally, we show that experts rarely imitate other experts, yet they exhibit herding behaviour.

Suggested Citation

  • Ge Gao & Mustafa Caglayan & Yuelei Li & Oleksandr Talavera, 2020. "Expert Imitation in P2P Markets," Discussion Papers 20-10, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:20-10
    as

    Download full text from publisher

    File URL: https://repec.cal.bham.ac.uk/pdf/20-10.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Herzenstein, Michal & Dholakia, Utpal M. & Andrews, Rick L., 2011. "Strategic Herding Behavior in Peer-to-Peer Loan Auctions," Journal of Interactive Marketing, Elsevier, vol. 25(1), pages 27-36.
    2. Laurens Rook, 2006. "An Economic Psychological Approach to Herd Behavior," Journal of Economic Issues, Taylor & Francis Journals, vol. 40(1), pages 75-95, March.
    3. Raghuram Iyengar & Christophe Van den Bulte & Thomas W. Valente, 2011. "Opinion Leadership and Social Contagion in New Product Diffusion," Marketing Science, INFORMS, vol. 30(2), pages 195-212, 03-04.
    4. Mustafa Caglayan & Oleksandr Talavera & Lin Xiong & Jing Zhang, 2022. "What does not kill us makes us stronger: the story of repetitive consumer loan applications," The European Journal of Finance, Taylor & Francis Journals, vol. 28(1), pages 46-65, January.
    5. Chen, Xiao & Huang, Bihong & Ye, Dezhu, 2018. "The role of punctuation in P2P lending: Evidence from China," Economic Modelling, Elsevier, vol. 68(C), pages 634-643.
    6. Carlos Serrano-Cinca & Begoña Gutiérrez-Nieto & Luz López-Palacios, 2015. "Determinants of Default in P2P Lending," PLOS ONE, Public Library of Science, vol. 10(10), pages 1-22, October.
    7. Sylwester, Kevin, 2000. "Income inequality, education expenditures, and growth," Journal of Development Economics, Elsevier, vol. 63(2), pages 379-398, December.
    8. repec:zbw:bofitp:2019_022 is not listed on IDEAS
    9. Arieli, Itai, 2017. "Payoff externalities and social learning," Games and Economic Behavior, Elsevier, vol. 104(C), pages 392-410.
    10. Juanjuan Zhang & Peng Liu, 2012. "Rational Herding in Microloan Markets," Management Science, INFORMS, vol. 58(5), pages 892-912, May.
    11. Duncan J. Watts & Peter Sheridan Dodds, 2007. "Influentials, Networks, and Public Opinion Formation," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 34(4), pages 441-458, May.
    12. Kahle, Lynn R & Homer, Pamela M, 1985. "Physical Attractiveness of the Celebrity Endorser: A Social Adaptation Perspective," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 11(4), pages 954-961, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caglayan, Mustafa & Talavera, Oleksandr & Zhang, Wei, 2021. "Herding behaviour in P2P lending markets," Journal of Empirical Finance, Elsevier, vol. 63(C), pages 27-41.
    2. Caglayan, Mustafa & Talavera, Oleksandr & Xiong, Lin, 2022. "Female small business owners in China: Discouraged, not discriminated," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 80(C).
    3. Suárez-Gargallo, Carlos & Zaragoza-Sáez, Patrocinio, 2023. "A comprehensive bibliometric study of the balanced scorecard," Evaluation and Program Planning, Elsevier, vol. 97(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuho Chung & Yiwei Li & Jianmin Jia, 2021. "Exploring embeddedness, centrality, and social influence on backer behavior: the role of backer networks in crowdfunding," Journal of the Academy of Marketing Science, Springer, vol. 49(5), pages 925-946, September.
    2. Teply, Petr & Polena, Michal, 2020. "Best classification algorithms in peer-to-peer lending," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    3. Andreas Dietrich & Reto Rey, 2020. "What Matters to Individual Investors: Price Setting in Online Auctions of P2P Consumer Loans," Papers 2003.11347, arXiv.org, revised Dec 2022.
    4. Michal Polena & Tobias Regner, 2018. "Determinants of Borrowers’ Default in P2P Lending under Consideration of the Loan Risk Class," Games, MDPI, vol. 9(4), pages 1-17, October.
    5. Xia, Yufei & Zhao, Junhao & He, Lingyun & Li, Yinguo & Yang, Xiaoli, 2021. "Forecasting loss given default for peer-to-peer loans via heterogeneous stacking ensemble approach," International Journal of Forecasting, Elsevier, vol. 37(4), pages 1590-1613.
    6. Tian, Xin & Song, Yan & Luo, Chunlin & Zhou, Xiaoyang & Lev, Benjamin, 2021. "Herding behavior in supplier innovation crowdfunding: Evidence from Kickstarter," International Journal of Production Economics, Elsevier, vol. 239(C).
    7. Ferrer, José María & Ulrich, Klaus & Blanco-González-Tejero, Cristina & Caño-Marín, Enrique, 2023. "Investors’ confidence in the crowdlending platform and the impact of Covid-19," Journal of Business Research, Elsevier, vol. 155(PA).
    8. Dongwoo Kim, 2023. "Can investors’ collective decision-making evolve? Evidence from peer-to-peer lending markets," Electronic Commerce Research, Springer, vol. 23(2), pages 1323-1358, June.
    9. Samuel Ribeiro-Navarrete & Juan Piñeiro-Chousa & M. Ángeles López-Cabarcos & Daniel Palacios-Marqués, 2022. "Crowdlending: mapping the core literature and research frontiers," Review of Managerial Science, Springer, vol. 16(8), pages 2381-2411, November.
    10. Chen, Shiyi & Gu, Yan & Liu, Qingfu & Tse, Yiuman, 2020. "How do lenders evaluate borrowers in peer-to-peer lending in China?," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 651-662.
    11. Ruomeng Cui & Dennis J. Zhang & Achal Bassamboo, 2019. "Learning from Inventory Availability Information: Evidence from Field Experiments on Amazon," Management Science, INFORMS, vol. 65(3), pages 1216-1235, March.
    12. Mingfeng Tang & Mei Mei & Cuiwen Li & Xingyang Lv & Xushuang Li & Lihao Wang, 2020. "How does an individual’s default behavior on an online peer-to-peer lending platform influence an observer’s default intention?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-20, December.
    13. Kräussl, Roman & Kräussl, Zsofia & Pollet, Joshua & Rinne, Kalle, 2024. "The performance of marketplace lenders," Journal of Banking & Finance, Elsevier, vol. 162(C).
    14. Langley, David J. & Hoeve, Maarten C. & Ortt, J. Roland & Pals, Nico & van der Vecht, Bob, 2014. "Patterns of Herding and their Occurrence in an Online Setting," Journal of Interactive Marketing, Elsevier, vol. 28(1), pages 16-25.
    15. Štefan Lyócsa & Petra Vašaničová & Branka Hadji Misheva & Marko Dávid Vateha, 2022. "Default or profit scoring credit systems? Evidence from European and US peer-to-peer lending markets," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-21, December.
    16. repec:zbw:bofitp:2019_022 is not listed on IDEAS
    17. Qihua Liu & Xiaoyu Zhang & Liyi Zhang & Yang Zhao, 2019. "The interaction effects of information cascades, word of mouth and recommendation systems on online reading behavior: an empirical investigation," Electronic Commerce Research, Springer, vol. 19(3), pages 521-547, September.
    18. Tolga Akcura & Kemal Altinkemer & Hailiang Chen, 0. "Noninfluentials and information dissemination in the microblogging community," Information Technology and Management, Springer, vol. 0, pages 1-18.
    19. Xueru Chen & Xiaoji Hu & Shenglin Ben, 2021. "How do reputation, structure design and FinTech ecosystem affect the net cash inflow of P2P lending platforms? Evidence from China," Electronic Commerce Research, Springer, vol. 21(4), pages 1055-1082, December.
    20. Yingxiu Zhao & Wei Zhang & Pengfei Wang & Dehua Shen, 2020. "Borrower platform choice: The influencing factors on herding," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-12, March.
    21. Meyners, Jannik & Barrot, Christian & Becker, Jan U. & Bodapati, Anand V., 2017. "Reward-scrounging in customer referral programs," International Journal of Research in Marketing, Elsevier, vol. 34(2), pages 382-398.

    More about this item

    Keywords

    Peer-to-Peer Lending; Network Analysis; Expert Imitation; Big Data; Financial Technology;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bir:birmec:20-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oleksandr Talavera (email available below). General contact details of provider: https://edirc.repec.org/data/debhauk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.