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- Title
Selling Mechanism Design for Peer-to-Peer Lending and Related Markets: The Multi-Unit Uniform-Price Open Auction Versus Fixed Price.
- Authors
Huang, Guofang
- Abstract
In the past two decades, there has been a decline in the use of uniform-price auctions in favor of fixed prices in markets of peer-to-peer lending, equity crowdfunding, and initial public offerings. This article aims to analytically study why this trend might be occurring. The analysis reveals that, relative to a fixed price, a uniform-price auction leads to more herding and strategic delay of bid submission and, consequently, a smaller transaction completion probability and lower expected revenue. These predictions are consistent with the empirical regularities observed for the bidding behavior and funding outcomes on Prosper, one of the leading peer-to-peer online lending platforms, and those documented in the literature for markets of equity crowdfunding and initial public offerings.
- Subjects
FIXED prices; PRICING; AUCTIONS; SELLING; BIDDING strategies; BIDDERS; MARKETS; CROWD funding; GOING public (Securities)
- Publication
Journal of Marketing Research (JMR), 2023, Vol 60, Issue 3, p508
- ISSN
0022-2437
- Publication type
Article
- DOI
10.1177/00222437221113235