Published Papers
The Threat of Corruption and the Optimal Supervisory Task, with Luca Livio
Journal of Economic Behavior & Organization, Volume 133, Pages 172-186, January 2017
Previous version: ECARES Working Paper 2015-037 - Coverage: Economic Logic
We show the existence of a trade-off between monitoring and auditing an agent’s performance which arises when the supervisor is corruptible. Auditing reduces the expected cost of supervision whereas monitoring is more effective in preventing corruption.
Flexible and Mandatory Banking Supervision, with Luca Livio and Jorge Ponce
Journal of Financial Stability, Volume 34, Pages 86-104, February 2018
Previous version: ECARES Working Paper 2016-09
Supervisory capture can occur due to asymmetric information about banks’ risk. We argue that offering banks a Flexible-Supervision regulatory contract, designed to be chosen by those banks that will otherwise attempt to capture the supervisor, is a mechanism to implement the most efficient regulation.
Delegation with a Reciprocal Agent, with Ester Manna
The Journal of Law, Economics, & Organization, Volume 35, Issue 3, November 2019, Pages 651–695
Working paper version available at SSRN 2841623 - Shortlisted for the LAGV prize at the ASSET 2016
What is the relationship between a worker's preference for reciprocity and the discretion she receives in the workplace? In a theoretical model, we find that the relationship between the worker's reciprocity and discretion crucially depends on the conflict of interest with the principal. When preferences are more congruent (discordant), discretion is broader (more limited) if the worker is more reciprocal. Hence, reciprocity mitigates (exacerbates) a mild (severe) conflict of interest. We also present supportive evidence for the predictions of our model using the German Socio-Economic Panel dataset.
Friends or Foes? Optimal Incentives for Reciprocal Agents with Luca Livio
Journal of Economic Behavior & Organization, Volume 167, Pages 245-278, November 2019.
We show that employees can be induced to work harder by designing a psychological gift-exchange game, thereby replacing monetary with psychological incentives. We find that the optimal incentive scheme depends on the interplay between the agents’ attitudes towards risks and their preferences for reciprocity. Our findings can explain some puzzling empirical results.
Precontractual Investment and Modes of Procurement
European Economic Review, Volume 124, May 2020.
This paper explores the buyer’s choice of the procurement mode when there is uncertainty about the suitability of the design of the good. I show that the horizon of the relationship affects the buyer’s choices of auctions versus negotiations and of the delegation of the design task to the suppliers. In particular, when avoiding design failures is important and the interaction between the parties is repeated, negotiations are preferred and the design of the good is delegated to suppliers. In contrast, when the interaction is one-shot or the quality of the design is of secondary importance, auctions are preferred and the design task is retained by the buyer. The paper can account for a number of findings in the management literature concerning buyer-supplier relationships.
Setting the Budget for Targeted Research Projects, with Elisabetta Iossa
The B.E. Journal of Economic Analysis & Policy, Volume 21, no. 3, 2021, pp. 1013-1034.
We study how an agency should set the maximum award in funding competitions for targeted research projects when potential participants have heterogeneous opportunity costs and submit budget proposals without knowing the number of competitors.
Car Accidents in the Age of Robots, with Idoia Elizalde, Ester Manna, and Adrian Segura-Moreiras
International Review of Law & Economics, Volume 68, December 2021 (106022) - Coverage: Almacén de Derecho (in Spanish)
We study how different liability rules affect investment, autonomous-car adoption, and precaution choices. We find that strict liability outperforms the negligence rule.
Corruption, Regulation, and Investment Incentives, with Ester Manna
European Economic Review, Volume 142, February 2022. Online Appendix - Coverage: UB School of Economics
We compare two alternative authorization regimes for innovative activities that may have negative social repercussions: lenient authorization and strict authorization. We find that corruption (i) exacerbates the costs of using lenient authorization and, more surprisingly, (ii) can be socially beneficial under strict authorization, since it can mitigate an over-investment problem.
Firms' Ownership, Employees' Altruism, and Product Market Competition, with Ester Manna
Economic Modelling, Volume 109, April 2022.
We study how product market competition affects firms' decision to hire altruistic or selfish employees in a mixed-duopoly environment.
Corruption and the Case for Safe-Harbor Regulation, with Ester Manna
Economics Letters, Volume 216, July 2022, 110546
Corruption favors the adoption of a stricter authorization regime and strengthens the case for making firms immune from ex-post liability so as to encourage ex-ante investment.
Courts' Decisions, Cooperative Investments, and Incomplete Contracts
Accepted for publication in the Journal of Legal Studies
Latest working paper version available at SSRN 2985620
Göran Skogh Award for the best paper presented by a young scholar at the 33rd EALE Annual Conference
Buyers may try to motivate their sellers to make relationship-specific investments to reduce the probability that the design of the goods they procure is defective. In some countries, courts examine how much real authority the seller had in performing the work to assign liability for a design failure. I show that this approach induces the sellers to under-invest and the buyers to under-specify the design of the goods. I explore efficiency-based justifications for this approach, such as the facilitation of optimal relational contracts and the provision of incentives to cooperate once the contract is signed.