This paper analyzes the design of innovation contests when the quality of an innovation depends on the research approach of the supplier, but the best approach is unknown. Diversity of approaches is desirable because it generates an option value. In our main model with two suppliers, the buyer...

What explains the variation in terrorism within and across political regimes? We contend that terrorism is most likely to occur in contexts in which governments cannot credibly restrain themselves from abusing their power in the future. We consider a specific institutional arrangement, whether a...

In the context of international bargaining, standard models predict that a shift in military power can cause preventive war because it changes the relative bargaining position between states. We find that shifts in military power are not the only cause of war under commitment problems and that...