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Post by batchoy on Jun 3, 2014 19:40:28 GMT
But only if the money in all the accounts was the property of one lender. That's the scenario a queue opens itself to. We already have users with multiple accounts because they manage their own funds and those of their business, there are others who have several family members lending and we have no way to tell if that's one person or several. In addition to my money I manage the funds for two family trust funds which if the trustees all agreed could be invested in AC, thus giving me three accounts at which point under your rules the accounts would be discriminated against because they were under my management even though only one of them actually contained my money. At this point because I am discriminated against and getting a lesser return on each individual account due to the system treating them as an aggregate account I walk away and take all my business elsewhere. Under the queue system you'd gain an unfair advantage. Under a capital weighted lottery you would have the same chances whether you had one account or three, but if you have £1m to deploy as cash on the system you have greater chance than if you have £100. I don't think that's fair either as it biases things too far towards the large investors (they'll always be someone with deeper pockets than you). So some kind of limit or cap on the weighting may be preferable. Again you assume that the money held in each of the accounts that I manage is mine and thus ascribe an unfair advantage to me because there a three requests in a queue from accounts my name against someone else's one. Whereas there are four separate accounts in the queue three which I manage but each one containing funds belonging to a separate legal entity and one belonging to a fourth person.
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Post by bracknellboy on Jun 3, 2014 19:42:02 GMT
This is currently a rather active thread: but its gone a bit 'off topic' given that it was about whether to dip toe into AC waters. Personally, I continue to be significantly impressed by: - the amount of time AC spend interacting with this forum ( chris: You still have a (newish) kid on the block to give attention to). - the apparent relative 'deep thought' which AC appear to give to how to take the platform and lender model forward: sufficient to at least have a good stab at avoiding 'unintended consequences' of what they implement. |
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Post by chris on Jun 3, 2014 21:13:46 GMT
Again you assume that the money held in each of the accounts that I manage is mine and thus ascribe an unfair advantage to me because there a three requests in a queue from accounts my name against someone else's one. Whereas there are four separate accounts in the queue three which I manage but each one containing funds belonging to a separate legal entity and one belonging to a fourth person. Yeah I get your point and whatever we come up with will need to address it. Hopefully we can find a happy medium that addresses this without giving enough advantage to those seeking to abuse the system.
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bugs4me
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Post by bugs4me on Jun 3, 2014 21:23:42 GMT
Again you assume that the money held in each of the accounts that I manage is mine and thus ascribe an unfair advantage to me because there a three requests in a queue from accounts my name against someone else's one. Whereas there are four separate accounts in the queue three which I manage but each one containing funds belonging to a separate legal entity and one belonging to a fourth person. Yeah I get your point and whatever we come up with will need to address it. Hopefully we can find a happy medium that addresses this without giving enough advantage to those seeking to abuse the system. - log off and go to bed - nite nite - 
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markr
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Post by markr on Jun 3, 2014 22:24:16 GMT
Rotating through the queue based on the lowest quantum of loan part is patently ridiculous. Transpose it to a filling station, the lowest quantum the filling station sell is a litre, I drive up to the pump with the intention of filling my tank with 40 litres and I have the cash to do so, however because someone has driven in behind me the pump restricts me to a 1 litre which I have to pay for then drive out and back round to the end of the queue and start all over again and each time I do this there are potentially more new people sat in the queue in front of me so I never know when I am going to actually get my 40 litres as I have idea of how big the effective queue will be. Your analogy is not what we are discussing, because you assume there's plenty of fuel. What we are discussing is more like the oil crisis of the 70s where fuel was in very short supply. Would you be happy if you queued all day at the garage only for the person in front of you to fill their tank and 10 Jerry cans, leaving you and everyone else with nothing? Would it make you feel any better if that person had only just passed their test? Or was actually a family of 5? Or diversified into polo mints and diet coke from the shop? Incidentally, during petrol shortages, the usual response is to impose rationing in the form of a maximum amount of fuel in one visit and a time limit before you can return, which is exactly the queueing system I and others proposed, and it is implemented because it considered the fairest way to allocate a scarce resource among those that want some. I would also like to say that I admire AC and chris especially for taking part in this forum and debates like this in particular. This thread has produced a lot of comment and clearly people are disagreeing and hold strong views, and yet there's been no personal abuse, no dummies spat out, no bad language, just reasoned and well articulated argument. Well done everyone, although I expect the end result will be we'll all agree to disagree and go to beddy byes. Night night.
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bigfoot12
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Post by bigfoot12 on Jun 4, 2014 7:20:34 GMT
Also what happens when someone adjusts their target investment? If they change it from £200 to £100 do they go to the back of the queue? What if they just routinely put a £10 instruction in every loan when it appears on the site and then edit it up as they see fit at their leisure? Neither seems fair and if you always go to the back of the queue why not just stick an instruction of £1m against every loan and then use your cash balance to deploy funds as loans draw down / auctions start. Chris the best matching systems allow you to reduce your order size without losing position. When increasing size the best systems leave the existing order where it is and the new addition is treated like a new order with a new position in the queue.
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Post by chris on Jun 4, 2014 7:29:13 GMT
Also what happens when someone adjusts their target investment? If they change it from £200 to £100 do they go to the back of the queue? What if they just routinely put a £10 instruction in every loan when it appears on the site and then edit it up as they see fit at their leisure? Neither seems fair and if you always go to the back of the queue why not just stick an instruction of £1m against every loan and then use your cash balance to deploy funds as loans draw down / auctions start. Chris the best matching systems allow you to reduce your order size without losing position. When increasing size the best systems leave the existing order where it is and the new addition is treated like a new order with a new position in the queue. What's to stop you automatically placing a large bid (or even manually for that matter) for each loan to get yourself to the front of the queue and then drop it to the size you actually want when you've had time to reflect? It wouldn't be desirable if all our lenders had to rush to the site whenever a new loan is placed, reserve their place in the queue with a big auto invest mandate, then manually adjust it later after reviewing the loan docs, etc. What you describe is trivial to implement I'm just not convinced it's effective or fair.
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Post by chris on Jun 4, 2014 7:37:11 GMT
Incidentally, during petrol shortages, the usual response is to impose rationing in the form of a maximum amount of fuel in one visit and a time limit before you can return, which is exactly the queueing system I and others proposed, and it is implemented because it considered the fairest way to allocate a scarce resource among those that want some. I would have thought that ease of implementation was more important than fairness. It's more fair than a free for all, but surely a fair system (if that's what you're targeting) would be to vet people based on individual need and overall benefit to society. Does a recruitment consultant (just an example!) need that fuel as much as a doctor? There'll be others that argue that a free for all would be more fair as they were able to get to the front of the queue so surely they should be allowed to benefit. That's fair to them. Everyone has their own definition of fair and a queue system will skew the market as much as any other solution.
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Post by chris on Jun 4, 2014 7:56:27 GMT
If we treat a new loan coming on the site as a special case that will see a different solution to balancing everyone's requirements, for the general case of choosing who gets to buy individual loan units when they come up for sale what about something along these lines: someone is chosen at random from the list of lenders interested in increasing their investment in that loan who have sufficient funds, but there is a weighting applied based on when they last successfully bought a loan unit on the aftermarket across the entire site (not just in that loan). So the most recent purchaser would have a factor of 1.0 and the person with the longest length of time since successfully purchasing something on the aftermarket would have a factor of 2.0 (for example, could be 1.5 or 3.0 or whatever). New users would join the queue at a factor of 2.0. Everyone else would be graded between 1.0 and 2.0 based on the length of time between the extremes, and only people with funds and active mandates would be considered in the times (so no idle accounts skewing the market).
This way everyone has a chance at buying every loan unit that becomes available but those who have been waiting longer will have a greater chance, skewing things in their favour. As soon as they successfully purchase something they'll drop to the back of the queue, but still have a chance of buying the next loan unit. As this works across the site instead of per loan it should also balance against those focussed on a single loan vs many loans, giving those focussed on a single loan a higher chance of purchase on the rarer occasion that loan units become available.
I have no idea if 2.0 is the right factor, it may need to be higher or lower than that, but as a concept I currently quite like it and I think it addresses many of my other grumbles about a simple queue.
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Post by Come_on_Grandad on Jun 4, 2014 8:16:17 GMT
I agree that a queue system, however you construct it, could leave someone perceiving that they are being disadvantaged. I think it may be easier to construct a weighted lottery that is widely perceived to be fair. The weighting should be the minimum of - your available cash balance at that instant
- the amount your mandate for this loan says that you want to buy
If you hold the winning ticket, you buy all that you want. Any remainder is offered to the runner-up ticket, etc |
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markr
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Post by markr on Jun 4, 2014 9:03:11 GMT
If we treat a new loan coming on the site as a special case that will see a different solution to balancing everyone's requirements, for the general case of choosing who gets to buy individual loan units when they come up for sale what about something along these lines: [snip] You don't say if when the purchaser is selected as the "winner" they will be able to buy everything available if their mandate allows. I still think it would be fairer to restrict the maximum that can be bought in one transaction if the supply is scarce.
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bigfoot12
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Post by bigfoot12 on Jun 4, 2014 9:16:20 GMT
Chris,
Would you ever consider revealing the size the of the queue? i.e. how much is in front of me? Some might want to chose loans with shorter queues.
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Post by batchoy on Jun 4, 2014 9:25:00 GMT
If we treat a new loan coming on the site as a special case that will see a different solution to balancing everyone's requirements, for the general case of choosing who gets to buy individual loan units when they come up for sale what about something along these lines: [snip] You don't say if when the purchaser is selected as the "winner" they will be able to buy everything available if their mandate allows. I still think it would be fairer to restrict the maximum that can be bought in one transaction if the supply is scarce. You either have to have a permanent restriction or no restriction otherwise the system becomes unfair. For example you have a loan listed on the AM and there is just £2000 available I reach the front of the but because of the 'scarcity' instead of the £1000 share I want I only get £100 worth and I am sent to the back of the queue. However just as this happens an underwriter releases £500,000 onto the AM meaning that the loan has ceased to be scarce and the next person in the queue gets the full £10,000 worth they are looking for. I perceive this has highly unfair as I get less than someone who has been in the queue for a shorter time than me and I have to work my way round to the front of the queue to get the remaining £900 I want potentially for the whole scenario to repeat itself.
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Post by yorkshireman on Jun 4, 2014 9:25:48 GMT
If Chris is continually bombarded with questions this project will be delayed leading to another round of complaints and questions. 
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Post by batchoy on Jun 4, 2014 9:50:39 GMT
I agree that a queue system, however you construct it, could leave someone perceiving that they are being disadvantaged. I think it may be easier to construct a weighted lottery that is widely perceived to be fair. The weighting should be the minimum of - your available cash balance at that instant
- the amount your mandate for this loan says that you want to buy
If you hold the winning ticket, you buy all that you want. Any remainder is offered to the runner-up ticket, etc The problem with a weighted system particularly if the weighting includes investment activity is that it becomes a disincentive to investing in the more unpopular loans with the potential result that Underwriters are left holding large chunks of loans that nobody wants. After all why would I want to purchase £20 worth of a loan that I perceive to have a high risk if it is going to put me toward the back of the queue for a loan which I perceive to have a low risk and that I potentially want to invest £1000 in.
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