We report the results of a laboratory experiment which examines the impact of precontractualcommunication in person-to-person lending. We show that potential hiddenaction undermines the positive effect of communication on repayment behavior and creditprovision. When strategic defaults by...

We study the impact of pre-contractual communication on market outcomes when economic relationships are subject to hidden action. Our experiment is framed in a credit market context and borrowers (second movers) can communicate with lenders (first movers) prior to entering the credit...

In this paper we reply to Binmore and Shaked's criticism of the Fehr-Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social...