Evolutionary Game Analysis of Three Players on Behavioural Strategy of P2P Lending Participants: A Sustainable Operations Perspective

In China, most of peer-to-peer (P2P) lending platforms do not possess operational sustainability due to excessive defaults. To address this problem, the conflict of interests among P2P lending participants is discussed using a stakeholder approach. An evolutionary game model (EGM) of three players is developed to analyse the interactions among regulatory authorities, P2P lending platforms, and borrowers. Then, the asymptotic of the equilibrium and evolutionary stability strategies of the EGM are analysed. Results indicate that either the P2P lending platforms or borrowers will choose “noncompliant operation” or “default” strategies from a short-term perspective, and the strict supervision of the P2P lending platform in the short term is necessary for the sustainable operation of the platform. When supervision is intensified in the early stage and regulatory pressure becomes a normal state, P2P lending platforms and borrowers will actively select “compliant operation” and “repayment” strategies even if there is a lack of regulation in the future. Meanwhile, the behavioural strategies of P2P lending participants can be changed to conform to the sustainability of P2P lending by reducing the costs of strict supervision and increasing the damage caused by general supervision, reward and punishment coefficient for P2P lending platforms, repayment incentives of borrowers, and defaulting opportunity costs. Finally, suggestions for regulating the behaviours of P2P lending participants and promoting sustainability of P2P lending industry are discussed.