Date & Time：Dec.25, 2019 10:00 - 11:30a.m.
Venue：SEM501 Meeting Room
Speaker：Weining Bao （University of Connecticut）
Abstract：
Online crowdlending platforms often allow initiators to provide various (often unverified) information about the focal projects. On one hand, these unverified descriptions of initiators’ characteristics and project prospects may help backers evaluate the underlying projects, while on the other hand could result in cheap talk by the initiators that reduces the credibility of the information about the underlying projects. We study cheap talk in online crowdlending platforms that could potentially undermine the crowdlending efforts. We utilize detailed transaction data of an online crowdlending platform and use text-mining tools to analyze the raw text in over 11,000 project descriptions. Our reduced-form analysis shows that cheap talk, on average, does not improve the crowdlending outcome. However, the effect of cheap talk on crowdlending is heterogeneous over projects. We find that cheap talk helps low credit rating initiators in crowdlending, and this positive effect depreciates as the initiators’ credit ratings improve. We then develop and estimate a structural model of cheap talk in online crowdlending, conduct counterfactual experiments and discuss the related managerial implications for platforms and initiators.
Speaker Biography：
Weining Bao received his Ph.D. in economics at Johns Hopkins University, and now he is an assistant professor of marketing at School of Business, University of Connecticut. Professor Bao's research focuses on empirical and analytical modeling of strategic interactions between firms and consumers. His research is interdisciplinary and spans marketing, economics and finance. He is particularly interested in the firms' strategic decisions in the context of information asymmetry and moral hazard, and their implications for digital marketing, marketing of financial services, education marketing and emerging markets. His research has been published in the leading marketing journals such as Marketing Science.
