We study the investor behavior on a leading peer-to-business lending platform and find evidence of two new investment biases - a default shock bias and a deep market bias. First, we find investors to stop investing in new loans and to cease from diversifying their portfolio after experiencing a...

We study the investor behavior on a leading peer-to-business lending platform and identify a new investment mistake – a default shock bias. First, we find that investors stop investing in new loans and cease from diversifying their portfolio after experiencing a loan default. The default...