Vanishing Signals: Trading Agent Kills Market Information (Evidence from a Natural Experiment in Online Social Lending)
Event details
| Date | 23.06.2011 |
| Hour | 09:15 |
| Speaker | Prof. Jens Grossklags, Pennsylvania State University |
| Location | |
| Category | Conferences - Seminars |
Advances in information technology enable the creation of new markets as social coordination mechanisms in numerous ways, including those where humans and computer algorithms interact. Because humans and computers differ in their capabilities to emit and process market signals, there is a need to understand what determines the aggregate level of signaling. We frame the arising signaling regime as alternative equilibrium outcomes in a coordination game. More specifically, we tackle the general research question from the perspective of new electronic credit markets. On online social lending platforms, borrowers' offers typically contain detailed personal information next to hard facts such as credit ratings. We investigate whether a change of the market mechanisms in the form of the introduction of an automated trading agent shifts the dynamics of information revelation from a high-effort signaling norm to a low-effort information equilibrium. After developing the theoretical background for our analysis, we scrutinize our hypothesis in the form of a natural experiment at Smava.de and find strong support for our proposition. Prof. Grossklags' homepage
Practical information
- General public
- Free