document: Dynamics of bidding in a P2P lending service : effects of herding and predicting loan success Online peer-to-peer ( P2P ) lending services are a new type of social platform that enables individuals borrow and lend money directly from one to another . In this paper , we study the dynamics of bidding behavior in a P2P loan auction website , Prosper.com . We investigate the change of various attributes of loan requesting listings over time , such as the interest rate and the number of bids . We observe that there is herding behavior during bidding , and for most of the listings , the numbers of bids they receive reach spikes at very similar time points . We explain these phenomena by showing that there are economic and social factors that lenders take into account when deciding to bid on a listing . We also observe that the profits the lenders make are tied with their bidding preferences . Finally , we build a model based on the temporal progression of the bidding , that reliably predicts the success of a loan request listing , as well as whether a loan will be paid back or not .
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