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Online Communities Lead to Risky Financial Decisions

Apparently, communities can critically impact our everyday behavior beyond of what we would generally be willing to accept.

An analysis of Prosper.com and a study of 600 lenders over an 18-month period showed that active social community members had riskier loan portfolios and lent their money to borrowers with worse credit ratings  than others. A study of 13,000 eBay customers revealed that online community members were comfortable with riskier bidding and ended up spending more money for items purchased. The scientists said that the willingness to take risks scales in line with the participation in online communities: The more active people are, the riskier their behavior.

Interestingly, online community members also "tend to believe" that their community will support them when they are in trouble, which is a scenario that apparently promotes risky behavior.

"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," Utpal Dholakia, professor of management at Rice University, said. "These communities are different from social networking sites like Facebook, because the individuals involved are usually strangers whose identities are unknown to the consumer."