implement a binary trust game with hidden action in a lab-in-the-field experiment with residents of an informal housing area in … exchanges with few information asymmetries. -- trust ; social distance ; hidden action ; solidarity ; economic development … part of the social network. We examine what makes the decision to trust a stranger different from the decision to trust a …

hidden action. Our experiment is framed in a credit market context and borrowers (second movers) can communicate with lenders … increases trust (credit provision) in an environment where opportunistic behavior by borrowers is revealed ex-post to lenders …

knowledge. We test this result in a laboratory experiment. The data cannot confirm the predicted welfare dominance of private …