financing frictions and fair debt pricing, short-term debt increases incentives for risk-taking. To do so, we develop a model in … which firms are financed with equity and short-term debt and cannot freely optimize their default decision because of … to increase asset risk in an attempt to improve interim debt repricing and prevent inefficient liquidation. These risk …

the firm's behavior. An experiment tests the theoretical predictions. In line with theory, Strict Liability and Negligence … firm to compensate potential victims. In contrast with theory, prevention rates absent liability are much higher and …