Small Businesses and Bankruptcy: Understanding Information Frictions and Stigma

Last registered on December 23, 2022


Trial Information

General Information

Small Businesses and Bankruptcy: Understanding Information Frictions and Stigma
Initial registration date
November 13, 2020

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 13, 2020, 8:34 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
December 23, 2022, 1:59 AM EST

Last updated is the most recent time when changes to the trial's registration were published.



Primary Investigator


Other Primary Investigator(s)

PI Affiliation
PI Affiliation
University of Chicago
PI Affiliation
Harvard Business School

Additional Trial Information

Start date
End date
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
This study seeks to measure what small firms know about bankruptcy protection, as well as to understand stigma regarding bankruptcy protection. In addition, we are interested in how firm beliefs and decisions are affected by information. The experiment is conducted via surveys and short videos with a sample of small business owners in the US.

External Link(s)

Registration Citation

Bernstein, Shai et al. 2022. "Small Businesses and Bankruptcy: Understanding Information Frictions and Stigma." AEA RCT Registry. December 23.
Experimental Details


Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
1. Information about bankruptcy.
2. Stigma about bankruptcy.
3. Incentivized interest in bankruptcy options.
Primary Outcomes (explanation)
Information about bankruptcy will be measured using several factual questions. We will ask about knowledge of the difference between Chapter 7 and 11, whether bankruptcy means death of a business, and the Small Business Reorganization Act (SBRA). We will analyze the share of subjects who get particular questions correct.

Stigma about bankruptcy will be measured using a series of Disagree/Agree questions (1-5 scale). We will analyze normalized responses to these questions, and also an overall measure of stigma created by averaging over the normalized responses and then normalizing again.

Incentivized interest in bankruptcy options will be measured using a series of binary choices. These include choices regarding a webinar on bankruptcy by an expert retired judge, a conversation with a small business owner who successfully used Chapter 11, two hours of paid time with a bankruptcy lawyer, two hours of time with a small business financial advisor, willingness to provide contacts of other business owners who might be interested in bankruptcy. Most of these questions ask respondents to choose between the given option and a gift card of varying amount, and most questions are asked also in the potential case where the business was in financial distress.

Secondary Outcomes

Secondary Outcomes (end points)
Expectations regarding staying operational, filing for bankruptcy, employment (incentivized for accuracy), debt renegotiation, investment, risk-taking, and debt.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The study uses a 3x1 design. Small businesses will complete an online survey on bankruptcy that includes various videos. The three arms are described in the hidden field.

Experimental Design Details
One arm is the Control group. In this group, small business owners will watch a video that discusses a hypothetical business going through financial distress.

The second arm is the Information group. In this group, in addition to the video seen by the Control group, business owners will watch a second video that provides information about bankruptcy protection, emphasizing that bankruptcy can offer a life after death via Chapter 11 bankruptcy. This includes discussion of the Small Business Reorganization Act.

The third arm is the Information+Stigma group. This group is similar to the Information group except that the second video is longer. In addition to the content on information about bankruptcy, it also provides content that helps address stigma about bankruptcy. It gives a list of large companies that have used bankruptcy, and it also mentions that bankruptcy is part of the US Constitution.

In addition to the above experimental design, we will also consider two additional sources of experimental variation. First, in addition to our main sample of firms, various firms will be coming to a webinar conducted by a retired federal bankruptcy judge and one of the coauthors (Iverson). Firms will be randomly assigned into answering questions before or after the webinar. The webinar will both provide information about bankruptcy and address stigma. Therefore, the firms assigned to answer questions before the webinar are similar to the Control group, and firms assigned to answer questions after the webinar are similar to the Information+Stigma group. In terms of analysis, we will analyze the data from this additional experiment both combined with the main experiment, and we will also analyze both the main experiment and additional experiment separately.

Second, at the time of the final follow-up survey conducted about 3 months after the video treatments, we will randomize whether subjects answer questions on information/stigma first or on real outcomes first. If making people think about information/stigma leads people to be less willing to explore bankruptcy or take other financial actions, then outcomes will be different in the group randomized to have the information/stigma questions first.
Randomization Method
Randomization done in office by a computer.
Randomization Unit
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
We hope to get around 1,500 small business owners (synonymous with firms).
Sample size: planned number of observations
Same as clusters.
Sample size (or number of clusters) by treatment arms
500 small business owners in each treatment arm.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
University of Chicago
IRB Approval Date
IRB Approval Number
IRB Name
University of Toronto
IRB Approval Date
IRB Approval Number
Protocol 39668
Analysis Plan

Analysis Plan Documents

Pre-analysis Plan

MD5: a5e8498227d27222a43493c48352c8eb

SHA1: f46563a2d01884cc1900483c7727c24eae760153

Uploaded At: November 23, 2020


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Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

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