default than students attending similarly selective public schools. Because for-profit schools tend to serve students from … amounts, an increased likelihood of borrowing, an increased risk of default, and worse labor market outcomes. Two-year for …-profit students also take out more loans and have higher default rates and lower earnings. But they are more likely to graduate and to …

We study default and endogenous leverage in the laboratory. To this purpose, we develop a general equilibrium model of … and there is no default. In contrast, when the risky asset is nonfinancial-namely, its payoff depends on ownership (such … as a firm)-collateral requirements are lower and default occurs. The experimental outcomes are in line with the theory …