Working Papers
"Learning it the hard way: Conflicts, economic sanctions and military aid", joint with A. Nicolò
Abstract
Countries involved in conflicts learn about their military strength from the battlefield. We study how a third party intervenes to manipulate this learning. An attacker and a defender engage in a conflict whose outcome conveys information about the attacker's strength. A third party fears the attacker’s aggressiveness and can intervene to help the defender. This intervention is risky: if the attacker wins despite the help the defender receives, its aggressiveness increases even further. We show that optimal third-party intervention is non-monotonic in the attacker’s strength. We also show that patriotism is a defensive strategy for the defender because boosting the resolve to fight forces third-party intervention.
"Public procurement and the risk of severe weather events", joint with A. Bafundi, R. Camboni, and P. Valbonesi
Abstract
We study the role of relational contracts in public procurements when public buyers (PBs) are exposed to severe weather events (SWEs). We develop a theoretical model where PBs select the firms that participate in procurement procedures and use this discretion to reduce the losses SWEs cause. Drawing on Italian public procurement data, we find support for the existence of relational contracts linked to SWEs. PBs that were exposed to SWEs use invitation-only procedures more often; and invitation-only procedures won by firms that have previously worked for the same PB experience less often time overruns in work execution.
"Legitimize through Endorsements", joint with A. Gallice
Abstract
Individuals differ in their propensity to violate social norms. Over time, the propensity of some individuals to violate these norms changes in response to socioeconomic shocks. When these changes are not publicly observable, norm abidance may remain high because individuals fear social costs. We study how an opinion leader who is privately informed about the direction and size of the societal change can boost or hinder the abidance by a social norm. We show that the opinion leader can impact individuals' behavior when she is neither too ideologically sided in favor of the norm violation, nor too concerned about her own popularity. The impact of the opinion leader is stronger when social concerns are an important driver of individuals' behavior, the uncertainty concerning the depth of the societal change is high, and citizens interact more often with like-minded individuals.
"Building Trust in Government: The Opportunities and Challenges of Adverse Shocks", joint with A. Acharya, H. Pei
Abstract
How do adverse shocks that align the interests of state and society shape a government's ability to build and maintain the trust of its citizens? We focus on the case where citizens cannot tell whether an adverse shock that warrants government action has hit, unless the government mishandles the crisis. We show that: (i) increasing the frequency of shocks has no impact on the scope of trust if shocks are severe, but reduces the scope of trust if shocks are mild; (ii) increasing the severity of shocks lowers social welfare but increases the extent of trust; and (iii) the opportunity to build a reputation for being trustworthy enhances both the government's payoff and social welfare beyond what is achievable when citizens know that the government is strategic.