Online interactions = riskier decisions

HOUSTON, Nov. 6 (UPI) -- The more people participate in online communities the more likely they are to make risky financial decisions, U.S., Canadian and Swiss researchers say.

Utpal Dholakia of Rice University in Houston, Jack (Xinlei) Chen and Juliet Zhu of the University of British Columbia in Vancouver and Rene Algesheimer of the University of Zurich in Switzerland used a series of field and laboratory studies to examine the behavior of people participating in message boards and chat rooms on the lending Web site Prosper.com and eBay.com.

One experiment, involving 600 lenders on the peer-to-peer lending site Prosper.com and conducted over an 18-month period, showed that those who participated the most in online communities possessed riskier loan portfolios, lending their money to borrowers with worse credit ratings and greater chances of default, the researchers said.

The study, scheduled to be published in the Journal of Marketing Research, found after examining the behavior of hundreds of people participating in message boards and chat rooms on sites that involve financial transactions, they found the higher the level of participation in the forums, the looser people were with their cash.

"Participants in these sites somehow come to believe that their fellow community members will come to their aid when something goes wrong, but in reality, they are out there on their own and could suffer adverse consequences," Dholakia said in a statement. "These communities are different from social networking sites like Facebook, because the individuals involved are usually strangers whose identities are unknown to the consumer."