Eliciting Social Knowledge for Creditworthiness Assessment

Access to capital is a major constraint for economic growth in the developing world. Yet lenders often face high default rates due to their inability to distinguish creditworthy borrowers from the rest. In this paper, we propose two novel scoring mechanisms that incentivize community members to truthfully report their signal on the creditworthiness of others in their community. We first design a truncated asymmetric scoring rule for a setting where the lender has no liquidity constraints. We then derive a novel, strictly-proper Vickrey-Clarke-Groves (VCG) scoring mechanism for the liquidity-constrained setting. Whereas Chen et al. [7] give an impossibility result for an analogous setting in which sequential reports are made in the context of decision markets, we achieve a positive result through appeal to interim uncertainty about the reports of others. Additionally, linear belief aggregation methods integrate nicely with the VCG scoring mechanism that we develop.