We develop a dynamic theory of investigations into an office-seeking candidate who has potentially committed wrongdoing and can obstruct the course of the investiga- tion. The candidate faces potential legal consequences and is sensitive to voter opinion, which is also affected by the investigation outcome. The investigator is motivated by revealing the truth. We characterize the optimal investigation and obstruction strate- gies. We then consider an opposition party who chooses when to level an accusation against the candidate, focusing on how obstruction affects this choice. We identify a novel force behind the timing decision; uncertainty about the median voter endows the opposition with risk preferences over voter learning. In close elections, an accusation’s credibility determines the opposition’s risk preferences. The opposition releases cred- ible evidence as an October Surprise, because the evidence is damaging enough that the opposition will not risk voters learning and potentially discounting the accusation. They release less credible accusations early in the election cycle hoping the accusation will be confirmed by election day. Obstruction damages voter information and welfare through two distinct channels; it makes investigations less informative, and as it in- creases, the opposition becomes more risk averse, and will start releasing lower quality accusations close to the election as well. Finally, we consider two policies that may reduce obstruction, plea-bargaining and extending the investigation past election day.

Presented at: UPenn Micro Theory Lunch (March, June, and October 2022), Stony Brook Game Theory Festival (July 2022)

This paper proposes a model of purchase order financing, a technique for funding firms with low collateral via debt. Investors consider agreements with customers to purchase finished goods from the firm, called purchase order agreements, when deciding whether a firm's funding proposal is acceptable. I identify a unique Weak Perfect Bayesian Equilibrium that satisfies the Intuitive Criterion for this setting. This equilibrium is fully separating, meaning that the firm proposes a unique and increasing loan size and debt repayment quantity based on their level of demand from customers. Moreover firms with large amounts of customer demand write purchase order agreements which reflect the full extent of their demand in order to demonstrate to investors their potential profitability and commit themselves to higher levels of effort. On the other hand firms with less demand, `shade down' the level of demand written into their purchase order agreements in order to avoid larger penalties should they fail at production. I compare this setting to a setting where firms can only access debt to demonstrate how firms with little collateral turn to purchase order financing over more traditional debt financing because purchase order financing allows the firms to acquire larger loans. The terms for loans are more favorable with purchase order financing because purchase orders serve as better signals of the firm's demand and help alleviate moral hazard by committing firms to higher levels of effort.

Presented at: North American Summer Meetings of the Econometric Society - June 2022, UPenn Micro Theory Lunch - November 2021 and May 2021