Consumer Choice and Corporate Bankruptcy

43 Pages Posted: 8 Jul 2021 Last revised: 18 Aug 2021

See all articles by Samuel Antill

Samuel Antill

Harvard Business School

Megan Hunter

Boston College - Carroll School of Management

Date Written: August 17, 2021


Using an incentivized randomized experiment, we estimate the causal effect of a Chapter 11 bankruptcy filing on consumer demand for the bankrupt firm's products. Knowledge of Hertz's Chapter 11 bankruptcy reduces consumers' willingness-to-pay for Hertz by 35%. We show evidence that consumers fear both (i) a liquidation preventing future relationships with a firm and (ii) a decline in quality while a firm reorganizes. Estimating a structural model of consumer demand, we quantify the large negative impact of Hertz's bankruptcy on Hertz's market share and consumer welfare. We find that educating consumers about Chapter 11 can improve consumer welfare.

Keywords: Consumer choice, bankruptcy, financial distress, structural estimation, experimental economics, Hertz

JEL Classification: D12, L15, G33

Suggested Citation

Antill, Samuel and Hunter, Megan, Consumer Choice and Corporate Bankruptcy (August 17, 2021). Available at SSRN: or

Samuel Antill (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Megan Hunter

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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