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(Phys Org2)   Banks now using game theory to catch customers gaming the bank on loan applications. "When you fill out an application form, you can lie. The purpose of my work is to catch liars"   (phys.org ) divider line
    More: Interesting, credit card fraud, PhD student, lower back  
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2414 clicks; posted to Business » on 11 Apr 2014 at 8:41 AM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



14 Comments     (+0 »)
 
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2014-04-11 07:59:40 AM  
When did Chong become such a buzzkill?
 
2014-04-11 08:09:58 AM  

eyemarten: When did Chong become such a buzzkill?


When Cheech started taking on serious acting roles
 
2014-04-11 08:15:22 AM  
Imagine this scenario: You go into a bank to fill out an application for a car loan or mortgage. The application asks for a number of things, like your income, assets or current debt load, to determine whether or not you are eligible for the loan. You're not a terrible applicant on paper, but you make a smidge less than what the bank would consider adequate for a loan.

So you lie - nothing big - just enough to sneak under the bank's radar.

"A person may earn $5,000 a month and can lie and say it's $7,000 a month. The banks don't really verify everything," Chong said.


Giving yourself a 40% paper raise is a 'smidge'?  Frankly I'd expect a little bit more from a Statistical and Actuarial Sciences PhD candidate....
 
2014-04-11 08:20:09 AM  
The problem with setting up a lying-alarm in a bank is analogous to setting up a smoke alarm in my barbeque. And not because "customers"
 
2014-04-11 08:55:36 AM  
Or you could, you know, underwrite your loans properly.

But why should they? They'll just be bailed out in the end.
 
2014-04-11 08:57:18 AM  
Not to mention the lie that the bank had any money to loan but just created it out of thin air when they saw you coming in the door.
 
2014-04-11 09:02:37 AM  
How do credit reports work?
 
2014-04-11 09:23:32 AM  
let me put on my robe and wizard hat
 
2014-04-11 09:36:26 AM  

jpo2269: How do credit reports work?


By gathering all the personal credit and identifying information of millions of people and selling it to some guy for resale into the black market.
 
2014-04-11 11:58:46 AM  
Applicants near the middle of the axis, those who fall on the 'bad' side, would be the ones most likely to profit from small lies on their application, using them to bump themselves to the 'good' side.

Wouldn't the ones that fall near the middle, but on the good side, be the liars?
 
2014-04-11 12:58:06 PM  
That might be one of the sorriest excuses for a PhD thesis in academia and that is saying a lot given how much sorry research their is.

"So you lie - nothing big - just enough to sneak under the bank's radar. "

How many applicant actually know what the bank's "radar" looks like? Nil. A bank's underwriting standards are not public information but closely guarded secrets. The proper answer to these type of lies is--who the hell cares? There are three types of liars in this situation (a) people who lie but who would have gotten approved anyway...BFD. (b) people who lie but who still do not get approved...BFD. (c) people who lie who get approved but would otherwise not get approved. This is a problem. But given the fact that the underwriting standards are secret the people who fall into this category are random. In short, from the viewpoint of economics this is just another instantiation of the "free rider" problem and we know what the proper response to the free rider problem is--nothing.

This sorry research is what happens when you have people who do not know anything about finance tell financial people what to do.
 
2014-04-11 12:58:39 PM  

impaler: Applicants near the middle of the axis, those who fall on the 'bad' side, would be the ones most likely to profit from small lies on their application, using them to bump themselves to the 'good' side.

Wouldn't the ones that fall near the middle, but on the good side, be the liars?


I think she means ones that should land on the bad side but because of their lie actually end up barely on the good side.
 
2014-04-11 09:15:09 PM  
I usually save everyone a lot of time, I walk into the bank and I tell them that I am denied a loan that I am interested in getting.. bang.. done..
 
2014-04-12 05:20:00 AM  

Kazahmish: I usually save everyone a lot of time, I walk into the bank and I tell them that I am denied a loan that I am interested in getting.. bang.. done..


Why walk when you could sashay?
 
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