Online Prosocial Microlending Decision Making

In 2014, a devastating Ebola virus epidemic burst in West Africa, which tremendously impaired the economies in the affected areas. During this crisis, in addition to traditional donations, some new forms of prosocial behaviors, such as online prosocial microlending, were adopted to help people in and near the affected areas.

This study extends the spotlight and gradient model to investigate people's online prosocial microlending decision making after natural disasters, which is both financial (rational) and prosocial (irrational) in nature. By leveraging the Ebola outbreak in 2014, this study designs a natural experiment to compare lender's online prosocial microlending behavior before and after the disaster. It finds that the average amount of online prosocial microlending in unaffected areas increases after the natural disaster and the increase is negatively related to the distance between the borrower and the affected areas.