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September 29, 2006


Andrew Martinez-Fonts

Hello, and thanks for this feedback on Prosper's bidding system. I'm the product manager for Prosper, and I wish we didn't have the partially outbid status, either, but it is necessary. And actually, eBay has it, too.

The issue is a necessity in any dutch auction (an auction with multiple buyers). On eBay, a seller could be selling 12 bowling pins in a dutch auction, and if the low bidder wants 6 and the next bidder wants 10, the next bidder inevitably must give up 4 of his desired bowling pins. Similarly on Prosper, you were the "next bidder" (we call it the "first losing bidder"), and less than your $100 bid was needed to complete the amount requested by the borrower. This happens on nearly all of our auctions, and is necessary to maximize the amount distributed to borrowers as well as the amount loaned by lenders. As I mentioned, we're open to suggestions on how to handle this better, but so far haven't come up with anything better than "partially outbid".



Thanks for this thoughful comment. I've been thinking all this time how to help, but I can't think of anything else other than to suggest that you have a "default" option where you decide who to give the loan to within certain parameters. Kind of like the Zopa option. For some financially savvy people, this may be acceptable compared to getting partially outbid all the time.

I hope you guys find a better fix for it. It would be a shame if this became a turnoff for others besides me.


How about the "non-competitive bid" option that the US Treasury uses in it's auctions. You reserve a part of the loan for non-competitive bids where a number of lenders agree a priori to take the ending percentage whatever it may be.

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