Institute for Financial Services Analytics Distinguished Speaker - Eric Zheng, Professor of Information Systems, Univ. of Texas, Dallas
Are you paying too much for financial advice?
The Transparency-Revenue Conundrum in Social Trading
Social trading, an emerging Fintech phenomenon, enables a trader to share their trading wisdom with other investors. We study the popular social trading mechanism - copy trading - where less experienced investors (followers) are allowed to copy the transactions of experts (traders) in an automated fashion. A copy trading platform often runs into a transparency-revenue conundrum. On the one hand, the platform needs to disclose traders’ transactions for followers to evaluate traders; on the other hand, such transparency undercuts the platform's revenue due to possible arbitrage. We address this problem by developing personalized information revelation policy based on the performance and characteristics of each individual trader. Collaborating with a leading social trading platform operating in the Foreign Exchange market, we show how the proposed policies can help minimize money at risk, the possible fees the platform would have lost using its current one-size-fits-all policy.
Zhiqiang (Eric) Zheng, is a professor in the Department of Information Systems and Operations Management at the Jindal School of Management, University of Texas at Dallas. He has a minor joint appointment with the Finance Department for which he teaches a class on Fintech. He received his Ph.D. in information systems from the Wharton School in 2003. His current research interests focus on fintech, healthcare analytics and social media analytics. He is a senior editor at Information Systems Research (ISR) and is a co-editor for the ISR special issue on fintech. His papers have appeared in Management Science, Information Systems Research, MIS Quarterly, Production and Operations Management and Informs Journal on Computing, among others.
Friday, October 12, 2018 at 10:30am to 12:00pm
Alfred Lerner Hall, Room 231
Alfred Lerner Hall, University of Delaware, Newark, DE 19716, USA