Learning by doing with asymmetric information
Subtitle: evidence from prosper.com
By: Seth M. Freedman, Ginger Zhe Jin
Contributors: Jin, Ginger Zhe; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16855; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16855.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "Using peer-to-peer (P2P) lending as an example, we show that learning by doing plays an important role in alleviating the information asymmetry between market players.  Although the P2P platform (Prosper.com) discloses part of borrowers' credit histories, lenders face serious information problems because the market is new and subject to adverse selection relative to offline markets.  We find that early lenders did not fully understand the market risk but lender learning is effective in reducing the risk over time.  As a result, the market excludes more and more sub-prime borrowers and evolves towards the population served by traditional credit markets"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 5/26/2011.

Includes bibliographical references.

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