Online Peer-to-Peer (P2P) loan auctions enable individual consumers to borrow and lend money directly to one another. We study herding behavior, defined as a greater likelihood of bidding in auctions with more existing bids, in P2P loan auctions on Prosper.com . The results of an empirical study provide evidence of strategic herding behavior by lenders such that they have a greater likelihood of bidding on an auction with more bids (a 1% increase in the number of bids increases the likelihood of an additional bid by 15%), but only to the point at which it has received full funding. After this point, herding diminishes (a 1% increase in bids increases the likelihood of an additional bid by only 5%). We also find a positive association between herding in the loan auction and its subsequent performance, that is, whether borrowers pay the money back on time. Unlike eBay auctions where herding impacts bidders adversely, our findings reveal that strategic herding behavior in P2P loan auctions benefits bidders, individually and collectively.

This article explores how consumers' self regulation affects the likelihood of purchase of new and really new products. In a mall intercept field study we show that consumers with a chronic disposition to be promotion focused own more new high-technology goods, and newly launched repeat purchase items, compared with prevention focused consumers. There was no difference in ownership of products that have been available for many years. We further investigated these findings in two laboratory experiments. In study 2, we manipulated regulatory focus and found that when the risks associated with a really new product are not specified to consumers, promotion focused consumers state higher purchase intentions than those in prevention focus. However, when the judgmental context makes the risks salient, participants in prevention and promotion focus were equally unlikely to purchase the product. In the third study we find that consumers' self regulation is unrelated to purchase intentions for products that are not portrayed as new. Mediation analysis in both laboratory studies show that the effect of regulatory focus on purchase intentions for new products is due to the concerns with the performance of the new technology, which are experienced by prevention focused consumers. Finally, important managerial implications are discussed.

This research examines how identity claims constructed in narratives by borrowers influence lender decisions about unsecured personal loans. Specifically, do the number of identity claims and their content influence lending decisions, and can they predict the longer-term performance of funded loans? Using data from the peer-to-peer lending website Prosper.com, the authors find that unverifiable information affects lending decisions above and beyond the influence of objective, verifiable information. As the number of identity claims in narratives increases, so does loan funding, whereas loan performance suffers, because these borrowers are less likely to pay back the loan. In addition, identity content plays an important role. Identities focused on being trustworthy or successful are associated with increased loan funding but ironically are less predictive of loan performance than other identities (i.e., moral and economic hardship). Thus, some identity claims aim to mislead lenders, whereas others provide true representations of borrowers.

The authors present empirical evidence that borrowers, consciously or not, leave traces of their intentions, circumstances, and personality traits in the text they write when applying for a loan. This textual information has a substantial and significant ability to predict whether borrowers will pay back the loan above and beyond the financial and demographic variables commonly used in models predicting default. The authors use text-mining and machine learning tools to automatically process and analyze the raw text in over 120,000 loan requests from Prosper, an online crowdfunding platform. Including in the predictive model the textual information in the loan significantly helps predict loan default and can have substantial financial implications. The authors find that loan requests written by defaulting borrowers are more likely to include words related to their family, mentions of God, the borrower’s financial and general hardship, pleading lenders for help, and short-term-focused words. The authors further observe that defaulting loan requests are written in a manner consistent with the writing styles of extroverts and liars.

Data from 1081 adults surveyed by the FDA were analyzed to explore consumers’ attitudes toward direct-to-consumer advertising (DTCA) of prescription drugs, and the relation between these attitudes and health related consumption behaviors. We report the favorableness of consumers’ reactions to DTCA, and more importantly, demonstrate that consumers’ attitudes toward DTCA are related to whether they search for more information about a drug that is advertised, and ask their physician about the drug. Finally, we document how consumers’ attitudes towards DTCA relate to the prescription writing behavior of their physicians. Mediation analyses that more fully explicate these findings are discussed. Copyright Kluwer Academic Publishers 2004direct-to-consumer advertising, consumer behavior,