With the help of lab experiments we study the impact of discharging insolvent debtors of their residual debt. We investigate the impact of different participation rules and the impact of different types of lenders. We find that higher participation rates encourage risk taking behaviour of...

The experimental literature on trust game experiments is quite extensive. Those studies consider situations in which trustors and trustees starting with a positive endowment might become even wealthier when Trust and Trustworthiness pay off. We contrast such a situation with a treatment in which...