Auctions versus Posted Prices in Online Markets

Einav, Liran; Farronato, Chiara; Levin, Jonathan; Sundaresan, Neel

doi:10.1086/695529

Cited by 141 publications

(84 citation statements)

References 21 publications

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“…Crowdfunding and peer-to-peer lending are in the ascendant. A variety of literature has made efforts to delve into the forms of crowdfunding, such as an equity purchase, loan, or pre-order on a product [48][49][50][51][52], or the economic mechanisms of peer-to-peer lending [15,[53][54][55]. For example, Wei and Lin [15] both theoretically and empirically investigated how the supply and demand of funds in online peer-to-peer lending markets are matched, and the prices at which transactions will occur.…”

Section: Related Literaturementioning

confidence: 99%

“…They concluded that, under platform-mandated posted prices, loans are funded with high probability, but at the same time with relatively high preset interest rates. Einav et al [55] showed that the choice between auctions and posted prices in online markets is essentially a trade-off between competitive discovery and convenience. Moreover, Gong [20] systematically analyzed the current situation, future prospect, and possible economic mechanisms of Internet finance, and the potential links between the use of the Internet and credit availability in China.…”

Section: Related Literaturementioning

confidence: 99%

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Access to the Internet and Access to Finance: Theory and Evidence

Chen

Gong²,

Chu

et al. 2018

Sustainability

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This paper aims at investigating the relationship between the use of the Internet and access to external finance of small and micro businesses, both theoretically and empirically. We first develop a theoretical model to explore how access to the Internet affects the credit availability of firms. The model suggests that access to the Internet can effectively mitigate financing difficulty of firms by alleviating information asymmetry and reducing agency cost, and thus can promote the sustainable development of those firms. The model also shows that access to the Internet can improve social welfare based on aforementioned mechanism. Using China household finance data from China Household Finance Survey, we tested the impact of access to the Internet on access to finance of small and micro businesses. Our empirical results confirm the positive role played by access to the Internet in alleviating financing difficulty of those firms. Moreover, we also found evidence that access to the Internet can reduce borrowers' dependence on physical branches of banks when making bank choice decision for loan applications. Our evidence also implies that access to the Internet is conducive to the sustainable development of small and micro businesses via mitigating their financing difficulty.Keywords: access to the Internet; access to finance; sustainable development of small and micro businesses JEL Classification: G21; O16

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Section: Related Literaturementioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Access to the Internet and Access to Finance: Theory and Evidence

Chen

Gong²,

Chu

et al. 2018

Sustainability

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“…Aliens have to pay for accessing the community network (as they do not contribute APs) through, for example, purchasing Wi-Fi passes from the operator. 3 Another important tool for dealing with problems with incomplete information is auction theory [22], which has also been widely-used in wireless networks [23][24][25]. Auction is more useful for the scenario of allocating limited resources among a set of users with incomplete (asymmetric) information, while contract is more useful for the scenario of motivating different types of users (with private information) behave in a desired way.…”

Section: System Modelmentioning

confidence: 99%

“…Note that the right-hand side of (28) might have multiple solutions, hence the dual function d(λ) may not be differentiable. We apply the subgradient method to solve the dual problem (27), i.e., we update the dual variable according to (22) in Algorithm 1, where t is the iteration index. The update rule (22) is intuitive: the dual variable λ k increases if the constraint p k ≤ p k+1 is violated.…”

mentioning

confidence: 99%

Incentivizing Wi-Fi Network Crowdsourcing: A Contract Theoretic Approach

Gao

Liu

et al. 2018

IEEE/ACM Trans. Networking

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Crowdsourced wireless community network enables individual users to share their private Wi-Fi access points (APs) with each other, hence can achieve a large Wi-Fi coverage with a small deployment cost via crowdsourcing. This paper presents a novel contract-based incentive framework to incentivize such a Wi-Fi network crowdsourcing under incomplete information (where each user has certain private information such as mobility pattern and Wi-Fi access quality). In the proposed framework, the network operator designs and offers a set of contract items to users, each consisting of a Wi-Fi access price (that a user can charge others for accessing his AP) and a subscription fee (that a user needs to pay the operator for joining the community). Different from the existing contracts in the literature, in our contract model each user's best choice depends not only on his private information but also on other users' choices. This greatly complicates the contract design, as the operator needs to analyze the equilibrium choices of all users, rather than the best choice of each single user. We first derive the feasible contract that guarantees the users' truthful information disclosure based on the equilibrium analysis of user choice, and then derive the optimal (and feasible) contract that yields the maximal profit for the operator. Our analysis shows that a user who provides a higher Wi-Fi access quality is more likely to choose a higher Wi-Fi access price and subscription fee, regardless of the user mobility pattern. Simulation results further show that when increasing the average Wi-Fi access quality of users, the operator can gain more profit, but (counter-intuitively) offer lower Wi-Fi access prices and subscription fees for users.

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“…Hertzberg et al (2016) studies borrowers' choices in online markets but focuses on adverse selection on loan maturity. Related to our focus on auctions, Einav et al (2016) examine auction theory in the context of eBay. Most relevant for our paper, Wei and Lin (Forthcoming) use Prosper's elimination of auctions to test a model of auction pricing.…”

Section: Introductionmentioning

confidence: 99%

Borrowers in Search of Feedback: Evidence from Consumer Credit Markets

Liskovich

Shaton

2017

FEDS

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We study recent technological innovation in credit markets and document their role in providing information to households. We show that households value the ability to learn detailed information about their cost of credit. This function is most valued by less creditworthy households with less experience in credit markets. To measure the demand for information provision we exploit a quasi-natural experiment in an online consumer credit market. A large lending platform unexpectedly switched from pricing loans through an auction mechanism to centralized pricing determined by broad credit grade. This change resulted in an instant decrease in the amount of tailored feedback available to market participants. We find that less experienced households immediately and disproportionately exit the market and the response is concentrated among higher risk households. We rule out alternative explanations such as changes in access to credit, borrower risk profiles, and interest rate levels. Our findings point to a potentially important role for financial innovation: enabling less experienced households to more easily learn about their credit market options. * We thank

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Auctions versus Posted Prices in Online Markets

Cited by 141 publications

References 21 publications

Access to the Internet and Access to Finance: Theory and Evidence

Access to the Internet and Access to Finance: Theory and Evidence

Incentivizing Wi-Fi Network Crowdsourcing: A Contract Theoretic Approach

Borrowers in Search of Feedback: Evidence from Consumer Credit Markets

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