Cornell University Department of Economics

• Research Interests
• Health and Disability
• Income Inequality
• Other Research

Other current research

Making an Offer They Can’t Refuse: How language features and persuasion techniques impact perceived trustworthiness and funding success in online peer-to-peer lending
Joint with Laura Larrimore, Li Jiang, Scott Gorski, Li Jiang and David Markowitz

Abstract: As human interactions move increasingly online, individuals are struggling to select and implement effective and appropriate trust-building and persuasive techniques. Peer-to-Peer (P2P) lending is a new online alternative to traditional bank loans where unaffiliated individuals lend money directly to each other rather than using a bank as an intermediary. This environment provides a natural experiment for examining how language can be used in an online environment to persuade and build trust. We examined how the language in more than 200,200 loan requests at P2P lending site Prosper.com affected lending behavior. Although borrowers often provide justifications or humanizing personal details, these verbal indicators did not increase funding by lenders. Instead, quantitative words which are likely to be related to the individual’s ability to repay a loan had a strong positive impact on loan success. Additionally, the number of words in the loan description had a significant positive impact, indicating that lenders are examining information in these descriptions to determine the trustworthiness of borrowers.