Djamchid Assadi, Arvind Ashta / Cahiers du CEREN 24(2008) pages 2-17 ISSN 1768-3394 - ISSN (En ligne) 1778-431X 2 /102 Cahiers du CEREN 24(2008) www.escdijon.com How Do People Trust on Peer-to-Peer Lending Websites? Impacts of the Web 2.0 Technologies on Trust Building in Microfinance 1 Djamchid Assadi a , Arvind Ashta b a Marketing Department, Groupe ESC Dijon Bourgogne, BP 50608 – 21006 Dijon cedex* b Finance Department, Groupe ESC Dijon Bourgogne, BP 50608 – 21006 Dijon cedex Received May 2008, accepted . * auteur à qui envoyer la correspondance, corresponding author Abstract The network-based technologies have considerably diminished transaction costs by allowing people to interact directly with each other. This article aims to investigate if people trust each other and proceed automatically to transactions whenever they can technologically contact and mutually communicate; or they rather do not trust even if technologies such as Web 2.0 tools provide with effective and direct contact between them. To explore the inquiry, we study how the websites of peer-to-peer lending which establish direct and horizontal connection between people; manage the question of trust between them. Key words: Trust, peer-to-peer, lending, transaction, intermediary, facilitator Résumé Les technologies de réseaux ont considérablement les coûts de transaction parce qu’elles permettent aux individus interagir directement. Cet article vise à étudier si les individus se font confiance et procèdent automatiquement aux transactions lorsque les technologies les permettent d’être en contact les uns avec les autres et communiquer mutuellement ; ou s’ils ne se font pas confiance malgré les technologies, telles que le Web 2.0, qui rendent possible les contacts effectifs et directs entre individus. Pour y répondre, nous nous penchons sur les manières par lesquelles les sites web de prêts entre individus qui établissent les contacts directs et horizontaux, gèrent la question de confiance entre pais. Mots clés: confiance, pair-à-pair, peer-to-peer, prêt, transaction, intermédiaire, facilitateur The network-based technologies in 1990s have considerably diminished transaction costs (Bulter et al, 1997). The Web 2.0 tools, by allowing people to interact with each other directly, have reinforced the process in the 2000s. An actual example of direct and horizontal connection between people is peer-to-peer lending which has been growing noticeably. Still, even an unprecedented interactivity-enabling technology cannot translate automatically into deals. People need to trust each other for further relations and especially transactions. How do new businesses which are genuinely based on peer-to-peer exchanges and transactions, manage to handle the old question of trust between individuals? This is the central inquiry of our paper. To treat it, we will focus on the peer-to-peer lending which is supposedly based on mutual and direct relations between individuals. By doing this, the central inquiry turns to be: Do peer-to-peer lending websites facilitate direct and mutually trustful transactions between individuals or they rather mortgage their own credibility to build trust between parties, and act as intermediary, by collecting funds from lenders for distributing subsequently to borrowers? Findings on this issue will shed light on one of the most important questions in the field of marketing distribution after the emergence of the Internet: disintermediation by facilitating direct transactions or re-intermediation by adapting the old role of distributors within the Network. 1 This communication has been presented at the 10 th Days in Experimental Economics, held at Burgundy School of Business in May 2008