Recommending teams promotes prosocial lending in online microfinance

Abstract

This paper reports the results of a large-scale field experiment designed to test the hypothesis that group membership can increase participation and prosocial lending for an online crowdlending community, Kiva. The experiment uses variations on a simple email manipulation to encourage Kiva members to join a lending team, testing which types of team recommendation emails are most likely to get members to join teams as well as the subsequent impact on lending. We find that emails do increase the likelihood that a lender joins a team, and that joining a team increases lending in a short window (1 wk) following our intervention. The impact on lending is large relative to median lender lifetime loans. We also find that lenders are more likely to join teams recommended based on location similarity rather than team status. Our results suggest team recommendation can be an effective behavioral mechanism to increase prosocial lending.

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