Bandits in Matching Markets: Ideas and Proposals for Peer Lending

• URL: http://arxiv.org/abs/2011.04400v4
• Date: Fri, 16 Apr 2021 07:46:52 GMT
• Title: Bandits in Matching Markets: Ideas and Proposals for Peer Lending
• Authors: Soumajyoti Sarkar
• Abstract summary: We describe a paradigm to set the stage for how peer to peer investments can be conceived from a matching market perspective. We devise a technique based on sequential decision making that allow the lenders to adjust their choices based on the dynamics of uncertainty from competition over time. Using simulated experiments we show the dynamics of the regret based on the optimal borrower-lender matching and find that the lender regret depends on the initial preferences set by the lenders.
• Score: 0.0
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Motivated by recent applications of sequential decision making in matching markets, in this paper we attempt at formulating and abstracting market designs for P2P lending. We describe a paradigm to set the stage for how peer to peer investments can be conceived from a matching market perspective, especially when both borrower and lender preferences are respected. We model these specialized markets as an optimization problem and consider different utilities for agents on both sides of the market while also understanding the impact of equitable allocations to borrowers. We devise a technique based on sequential decision making that allow the lenders to adjust their choices based on the dynamics of uncertainty from competition over time and that also impacts the rewards in return for their investments. Using simulated experiments we show the dynamics of the regret based on the optimal borrower-lender matching and find that the lender regret depends on the initial preferences set by the lenders which could affect their learning over decision making steps.

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