A Market Clearing Solution for Social Lending

Chen, Ning; Ghosh, Arpita

doi:10.5591/978-1-57735-516-8/IJCAI11-037

A Market Clearing Solution for Social Lending

Ning Chen, Arpita Ghosh

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Proceedings of the Twenty-Second International Joint Conference on Artificial Intelligence. Pages 152-156.

https://doi.org/10.5591/978-1-57735-516-8/IJCAI11-037

Abstract

The social lending market, with over a billion dollars in loans, is a two-sided matching market where borrowers specify demands and lenders specify total budgets and their desired interest rates from each acceptable borrower. Because different borrowers correspond to different risk-return profiles, lenders have preferences over acceptable borrowers; a borrower prefers lenders in order of the interest rates they offer to her. We investigate the question of what is a computationally feasible, 'good', allocation to clear this market. We design a strongly polynomial time algorithm for computing a Pareto-efficient stable outcome in a two-sided many-to-many matching market within differences, and use this to compute an allocation for the social lending market that satisfies the properties of stability — a standard notion of fairness in two-sided matching markets — and Pareto efficiency; and additionally addresses envy-freeness amongst similar borrowers and risk diversification for lenders.

Ning Chen, and Arpita Ghosh. 2011. A Market Clearing Solution for Social Lending. In Proceedings of the Twenty-Second International Joint Conference on Artificial Intelligence, IJCAI-11. IJCAI, 152–156. https://doi.org/10.5591/978-1-57735-516-8/IJCAI11-037

@inproceedings{ijcai2011p37,
  title     = {A Market Clearing Solution for Social Lending},
  author    = {Chen, Ning and Ghosh, Arpita},
  booktitle = {Proceedings of the Twenty-Second International Joint Conference on
               Artificial Intelligence, {IJCAI-11}},
  publisher = {AAAI Press/International Joint Conferences on Artificial Intelligence},
  editor    = {Toby Walsh},
  pages     = {152--156},
  year      = {2011},
  month     = {7},
  doi       = {10.5591/978-1-57735-516-8/IJCAI11-037},
  url       = {https://doi.org/10.5591/978-1-57735-516-8/IJCAI11-037},
}

TY  - CPAPER
TI  - A Market Clearing Solution for Social Lending
AU  - Chen, Ning
AU  - Ghosh, Arpita
T2  - Proceedings of the Twenty-Second International Joint Conference on Artificial Intelligence, IJCAI-11
PB  - AAAI Press/International Joint Conferences on Artificial Intelligence
PY  - 2011
SP  - 152
EP  - 156
DO  - 10.5591/978-1-57735-516-8/IJCAI11-037
UR  - https://doi.org/10.5591/978-1-57735-516-8/IJCAI11-037
ER  -