Pricing mechanisms in the online Peer-to-Peer lending market

Autor: Feng-ying Hu, Zheng-long Zhou, Ben-jiang Ma
Rok vydání: 2017
Předmět:
Zdroj: Electronic Commerce Research and Applications. 26:119-130
ISSN: 1567-4223
DOI: 10.1016/j.elerap.2017.10.006
Popis: This paper sheds light on the role that pricing plays in the loan bidding process of different platforms.This paper analyses the reasons for the differentiation of pricing mechanisms in the P2P market.This paper extends studies on the classification of pricing and bidding behaviour.This paper shows the BPM and the PPM provide incentives for lenders in the same settings. We discuss different pricing mechanisms in the online peer-to-peer lending market, including the borrower pricing mechanism (BPM), auction pricing mechanism (APM) and platform pricing mechanism (PPM), and analyse the pricing differences among them. First, different pricing models can be constructed to demonstrate the incentive compatibility of the different pricing mechanisms. We then further describe the equilibrium of the different pricing mechanisms and analyse the action strategies of borrowers and lenders. The results show that the BPM and PPM are incentive-compatible mechanisms as long as the loan is profitablethat is, each lender reports her own real type. However, the APM is not an incentive-compatible mechanism. Further, different types of BPMs or PPMs can be derived, and each lenders best response strategy will vary depending on the types of risk preferences in the different pricing mechanisms. Specifically, when lenders are risk averse, they will choose to bid the first time and exhaust their budget quota; when lenders are risk seeking, they will choose to bid late and exhaust their budget quota.
Databáze: OpenAIRE
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