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Evaluating Personal Default Risk in P2P Lending Platform: Based on Dual Hesitant Pythagorean Fuzzy TODIM Approach

Author

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  • Xiaonan Ji

    (Business School, Sichuan Normal University, Chengdu 610101, Sichuan, China)

  • Lixia Yu

    (Business School, Sichuan Normal University, Chengdu 610101, Sichuan, China)

  • Jiapei Fu

    (Business School, Sichuan Normal University, Chengdu 610101, Sichuan, China)

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.

Suggested Citation

  • Xiaonan Ji & Lixia Yu & Jiapei Fu, 2019. "Evaluating Personal Default Risk in P2P Lending Platform: Based on Dual Hesitant Pythagorean Fuzzy TODIM Approach," Mathematics, MDPI, vol. 8(1), pages 1-14, December.
    • Handle: RePEc:gam:jmathe:v:8:y:2019:i:1:p:8-:d:299514
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    References listed on IDEAS

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    1. Guo, Yanhong & Zhou, Wenjun & Luo, Chunyu & Liu, Chuanren & Xiong, Hui, 2016. "Instance-based credit risk assessment for investment decisions in P2P lending," European Journal of Operational Research, Elsevier, vol. 249(2), pages 417-426.
    2. Bin Zhu & Zeshui Xu & Meimei Xia, 2012. "Dual Hesitant Fuzzy Sets," Journal of Applied Mathematics, Hindawi, vol. 2012, pages 1-13, May.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Zhi-Ping Fan & Xiao Zhang & Yan-Ru Zhao & Fa-Dong Chen, 2013. "Multiple Attribute Decision Making With Multiple Formats Of Attribute Aspirations: A Method Based On Prospect Theory," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 12(04), pages 711-727.
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    1. Tang, Xinyin & Feng, Chong & Zhu, Jianping & He, Minna, 2022. "How Can We Learn from Borrowers’ Online Behaviors? The Signal Effect of Borrowers’ Platform Involvement on Their Credit Risk," SocArXiv qga8j, Center for Open Science.

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