Every day, hundreds of thousands of individuals receive small “digital credit” loans through their mobile phones. Yet, the credit scoring algorithms that form the foundation for these loans are remarkably primitive. The focus of this work is two-fold. First, researchers aim to develop a new type of algorithm that intentionally prioritizes loans to borrowers who are likely to actually benefit from the loan. Second, they are working on making these algorithms “manipulation-proof,” so that the details of the algorithm can be transparently provided to borrowers without fear of them strategically responding to that information. Results forthcoming.
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