Connections between individuals facilitate the exchange of goods, resources and information and create benefits. These connections may be exploited by adversaries to spread their attacks as well. What is the optimal way to design and defend networks in the face of attacks?We develop a model with a Designer and an Adversary. The Designer moves first and chooses a network and an allocation of defense resources across nodes. The Adversary then allocates attack resources on nodes; if an attack succeeds then the Adversary decides on how successful resources should navigate the network.We obtain two principal results. One, we show that in a wide variety of circumstances a star network with all defence resources allocated to the central node is optimal for the Designer. Two, we identify conditions on the technology of conflict, network value function and the resource configuration for which networks with multiple hubs/components are optimal.

Individuals respond to the risk of contagious infections by restricting interaction and by investing in protection. We develop a model that examines the trade-off between these two actions and the consequences for infection rates. There exists a unique equilibrium: individuals who invest in protection choose to interact more relative to those who do not invest in protection. Changes in the contagiousness of the disease have non-monotonic effects: as a result interaction initially falls and then rises, while infection rates too may initial increase and then decline. We then consider a society with two communities that differ in their returns from interaction-High and Low. Individuals in isolated communities exhibit different behavior: the High community has a higher rate of protection and interaction, and a lower rate of infection. Integration amplifies these differences.

A principal seeks to persuade an agent to accept an offer of uncertain value before a deadline expires. The principal can generate information, but exerts no control over exogenous outside information. The combined effect of the deadline and outside information creates incentives for the principal to keep uncertainty high in the first periods so as to persuade the agent close to the deadline. We characterize the equilibrium, compare it to the single-player decision problem in which exogenous outside information is the agent's only source of information, and examine the welfare implications of our analysis.

We develop an equilibrium theory of credit rating in the presence of rollover risk. By influencing rational creditors, ratings affect sovereigns' probability of default, which in turn affects ratings. Our analysis reveals a pro-cyclical impact of credit rating: In equilibrium the presence of a rating agency increases default risk when it is high and decreases default risk when it is low. *

Certifiers often base their decisions on a mixture of information, some of which is voluntarily disclosed by applicants, and some of which they acquire by way of tests or otherwise. We study the interplay between the information acquisition of certifiers and the information disclosure of applicants. We show that the inability of a certifier to commit to the amount of information to be acquired can result in a reduction of information disclosed. Among other consequences, given the choice between two information acquisition technologies, the certifier may prefer to commit to the inferior technology, in the sense of being either more expensive or less accurate.