Jiayu Yao, Mingfeng Lin, D.J. Wu. Revealed Wisdom of the Crowd: Bids Predict Loan Quality. Under 3rd round review at Management Science.
Despite the popularity of the phrase “wisdom of the crowd,” not all crowds are wise because not everyone in them acts in an informed, rational manner. Identifying informative actions, therefore, can help to isolate the truly “wise” part of a crowd. Motivated by this idea, we evaluate the informational value of investors’ bids using data from online, debt-based crowdfunding, where we were able to track both investment decisions and ultimate repayment statuses for individual loans. We propose several easily scalable variables derived from the heterogeneity of investors’ bids in terms of size and timing. We first show that loans funded with larger bids relative to the typical bid amount in the market, or to the bidder’s historical baseline, particularly early in the bidding period, are less likely to default. More importantly, these variables improve the predictive performance of state-of-the-art models that have been proposed in this context. Even during the fundraising process, these variables improve predictions of both funding likelihood and loan quality. We discuss the implications of these variables, including loan pricing in secondary markets, crowd wisdom in different market mechanisms, and financial inclusion. Crowdfunding platforms can easily implement these variables to improve market efficiency without compromising investor privacy.
Keywords: wisdom of the crowd, platform, crowdfunding, fintech
Invited talk at Chinese University of Hong Kong, Hanoi University of Science and Technology, Lehigh University, Nanyang Technological University, University of Hong Kong, University of New Hampshire, University of Texas at Austin, University of Texas at San Antonio
2023 Workshop on Information Systems and Economics (WISE)
2023 Annual Symposium on Statistical Challenges in eCommerce Research (SCECR)
2021 MIS Quarterly Virtual Author Development Workshop
2020 Conference on Information Systems and Technology (CIST)
2020 INFORMS Annual Meeting
Xuan Wei, Jiayu Yao, Mingyue Zhang, Wei Chen, Karen Xie. Backfiring of Location Disclosure: Evidence from Policy Examination through LLM Analytics. Under review.
2024 Conference on Information Systems and Technology (CIST)
2024 China Summer Workshop on Information Management (CSWIM)
Haofei Qin, Jiayu Yao, Mingfeng Lin. Pay Transparency, Hiring Frictions, and Worker Mobility: Evidence from IT Labor Market. Under review.
2025 Conference on Information Systems and Technology (CIST)
2025 INFORMS Annual Meeting
Zhichao Hu, Jiayu Yao*, Kim Huat Goh, Yeow Adrian, D' Souza Jared. Designing AI for Life-Death Situations: Physicians’ Action and Omission Biases. Under review. (*Corresponding author)
2025 Pacific Asia Conference on Information Systems (PACIS)
Best short paper nomination
2025 China Summer Workshop on Information Management (CSWIM)
2025 Conference on Information Systems and Technology (CIST)
Jiayu Yao, Li Ding, Jorge Mejia. Beyond the Campaign: How Kickstarter Shapes Startup Market Success.
2025 Workshop on Information Systems and Economics (WISE)
Jie Ren, Li Ding, Jiayu Yao, Anandasivam Gopal. A Better Matchmaker? The Impact of GenAI on Matching Efficiency in Online Labor Markets.
2025 International Conference on Information Systems (ICIS)
Jiayu Yao, Xuan Wei, Mingfeng Lin. Beyond the Financial Value of Crowdfunding: Evidence from an Interpretable Machine Learning Approach.
2024 Workshop on Information Technology and Systems (WITS) Feeder Workshop
2023 INFORMS Annual Meeting
Jiayu Yao, Kai Lu, Mingfeng Lin. Bewildered or Empowered? The Ambiguous Effects of Information Provision on Sequential Investors.
2023 Conference on Information Systems and Technology (CIST)
2022 INFORMS Annual Meeting
2021 INFORMS Annual Meeting
Co-Investigator. National Natural Science Foundation of China (NSFC), General Program (Grant No. 72571175), “Human–AI–Crowd” Collaborative Decision-Making Mechanisms and Applications in the Era of Large Language Models, RMB 400,000. 2026–2029.
Co-Investigator. Social Science and Humanities Research Thematic Grant, Social Challenges in Resource Allocation through AI across the Healthcare Ecosystem, S$3,440,605. 2025-2030.
Principle Investigator, Social Science & Humanities Research Seed Grant, Fintech and Entrepreneurship: How Crowdfunding Predicts Market Success, S$30,000. 2025–2027.
Principle Investigator, MOE AcRF Tier 1 Seed Funding, Online Education and Labour Market, S$50,000. 2024–2027.
Principle Investigator, Nanyang Business School Start-Up Grant, Location Disclosure and Online Hate Speech Behavior, S$50,000. 2023–2027.