J.Philipp Reiss and Irenaeus Wolff, Experimental Economics, 17(4): 586–614, 2014
- Do people respond to incentives of credit contracts in a limited-liability setting as predicted by theory? The answer is yes, but only after sufficient learning opportunities.
- After learning, non-monotonic contracts perform much better than standard debt contracts. However, under non-monotonic contracts, „entrepreneurs“ misreport their earnings in order to repay less, albeit much less so than they could (mirroring the lying literature).
