We study the behavioral underpinnings of adopting cash versus electronic payments in retail transactions. A novel theoretical and experimental framework is developed to primarily assess the impact of sellers’ service fees and buyers’ rewards from using electronic payments. Buyers and sellers...

This experiment examines the relationship between payment systems and the quality and quantity of services provided in credence goods markets. By using a real-effort task to stimulate the decision making of service providers, the study finds that payment systems do indeed have an impact on...

An outside stakeholder’s commitment to bail out a levered investment fund mightencourage the fund manager to take extreme risks. But what if the bailout were harsh?The loan would have a penalty rate and the manager would have to sacrifice partequity interest in the fund. I show that as the...