Abstract
An extended approach proposed in this paper is to make a more reasonable assessment of personal default risk in peer to peer (P2P) online lending platform, which reduces uncertainty while taking into account the psychological characteristics of lenders to avoid risk. The TODIM (an acronym in Portuguese of interactive and multi-criteria decision making) approach, which can describe the psychological behaviors of decision maker, has been proved to be effective to solve multi-attribute decision making (MADM) problems. The definitions of dual hesitant Pythagorean fuzzy set (DHPFS) and the processes of traditional TODIM approach are firstly introduced in this paper. Then, the TODIM approach is extended to solve the MADM problems with a dual hesitant Pythagorean fuzzy number (DHPFN). Finally, a case study evaluating the personal default risk in P2P online lending is conducted to demonstrate that the proposed approach is applicable to solve MADM problems. In addition, some comparative analyses are performed to compare the dual hesitant Pythagorean fuzzy TODIM method with the other two integrated operators of DHPFS. Through the comparisons, we conclude that the advantage of the proposed method over other methods is that it reduces uncertainty while taking into account the psychological characteristics of lenders to avoid risk. Today’s credit environment is fraught with risks, and the psychological behaviors of decision makers are important factors that cannot be ignored. For these reasons, the dual Pythagorean hesitant fuzzy TODIM method is applicable for evaluating personal default risk.
Highlights
P2P network lending is a new type of lending model
The dual Pythagorean hesitant fuzzy TODIM method is applicable for evaluating personal default risk
Our goal is to demonstrate the applicability of this approach in individual default risk evaluation and, more broadly, to apply it to more similar multi-attribute decision making (MADM) problems
Summary
P2P network lending is a new type of lending model. As a website that provides intermediary services, it connects capital applicants and providers together. Due to its relatively high rate of return while low threshold, requirement and cost, P2P online lending provides an important channel for borrowers who have difficulty in obtaining financing from the traditional financial industry. This lending model has been popularized nationwide. In 2007, the first P2P platform in China was established in Shanghai, there was a blowout in 2015.
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