I study the problem of monitoring in a dynamic setting, where the monitor's detection ability is endogenous. An agent chooses how much to offend and privately develops evasion technologies to make future offenses undetectable, while the monitor can invest to restore her detection ability. I analyze the dual effect of enforcement policies on offending and investment dynamics, revealing a trade-off: deterring detectable offenses increases the agent's investment incentives, leading to a more intense arms race with higher R&D spending and more evasion by the agent. Applications include digital security, drug trafficking, environmental monitoring of toxic emissions, doping, and tax evasion.

This paper studies the problem of optimal procurement in the presence of uncertainty about relevant production technology. A buyer chooses a symmetric procurement mechanism that depends on this technology and the set of relevant sellers. Each seller observes his production cost and the trade mechanism before choosing production technology. The main result of this paper shows that the optimal mechanism induces mixing in the technology adoption by the least efficient agents' types whereas the most efficient ones adopt only the technology that is most likely to succeed. Applied to a generalized auction setting, mechanisms involving mixing induce more efficient trade (in expectation) and a more aggressive bidding behavior by the least efficient types.

This paper studies the problem of resource allocation in the presence of moral hazard. An agent exerts effort and privately chooses resource allocation between two types of capital: one that increases the productivity of exerting effort and one that reduces its cost. Our analysis provides conditions such that the agent’s problem exhibits complementarity between effort and productivity. In this case, we show that the agent under-allocates resources to increase productivity. The paper’s main result provides sufficient conditions on the production problem such that the agent strictly benefits from the allocation being private information. The model can be applied to several economic environments, such as technology procurement, product development, and time allocation in labor settings.

This paper develops a comprehensive framework to analyse the role of surplus sharing and violence in shaping criminal relationships. Combining evidence from the literature with game-theoretical models, we analyze the determinants and impact of violence and surplus sharing on cooperation in extra-legal environments. Firstly, we show that peaceful cooperation is only possible in high-value activities and requires "fair surplus" distribution. This result explains why some criminal markets such as international cocaine trafficking are functional even under low levels of violence. Secondly, we show that a credible threat of violence is essential for low-value generating activities such as extractive protection. Additionally, we show that a higher ability to exert violence induces more surplus appropriation. We use these results to reassess the mechanisms used in extra-legal settings by focusing on their impact on value creation, benefit distribution, and the credibility of threats of violence.