A model for predicting court decisions on child custody.

Awarding joint or sole custody is of crucial importance for the lives of both the child and the parents. This paper first models the factors explaining a court's decision to grant child custody and later tests the predictive capacity of the proposed model. We conducted an empirical study using data from 1,884 court rulings, identifying and labeling factual elements, legal principles, and other relevant information. We developed a neural network model that includes eight factual findings, such as the relationship between the parents and their economic resources, the child's opinion, and the psychological report on the type of custody. We performed a temporal validation using cases later in time than those in the training sample for prediction. Our system predicted the court's decisions with an accuracy exceeding 85%. We obtained easy-to-apply decision rules with the decision tree technique. The paper contributes by identifying the factors that best predict joint custody, which is useful for parents, lawyers, and prosecutors. Parents would do well to know these findings before venturing into a courtroom.

Determinants of Default in P2P Lending.

This paper studies P2P lending and the factors explaining loan default. This is an important issue because in P2P lending individual investors bear the credit risk, instead of financial institutions, which are experts in dealing with this risk. P2P lenders suffer a severe problem of information asymmetry, because they are at a disadvantage facing the borrower. For this reason, P2P lending sites provide potential lenders with information about borrowers and their loan purpose. They also assign a grade to each loan. The empirical study is based on loans' data collected from Lending Club (N = 24,449) from 2008 to 2014 that are first analyzed by using univariate means tests and survival analysis. Factors explaining default are loan purpose, annual income, current housing situation, credit history and indebtedness. Secondly, a logistic regression model is developed to predict defaults. The grade assigned by the P2P lending site is the most predictive factor of default, but the accuracy of the model is improved by adding other information, especially the borrower's debt level.