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The Impact of Online Forums on Financial Decisions

Participation in online communities can lead to riskier financial decisions. Researchers from Rice University, the University of British Columbia and the University of Zurich reached this conclusion after looking at Prosper.com and eBay and conducting their own experiment. Their study was accepted for publication by the Journal of Marketing Research.

Prosper.com is a peer-to-peer lending site that matches lenders with borrowers. Lenders who participated in online communities with other Prosper.com lenders were more likely to make risky loans then those who didn’t.

For online auction website eBay, the study’s authors look at bidding patterns. The authors identified a set of users and invited half of them to join an online community. Those participating in the online community made more bids and paid more to win eBay auctions than those who didn’t participate in the online community.

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