Take the lead!An experimental analysis of leadership in team production

Enrique FatasLINEEXUniversitat de València

Sara GodoyLINEEXUniversitat de València

Motivation

Leadership in Team Production Leaders may alleviate free riding under some conditions

Leaders have the chance to exclude free riders, Guth et al. (2004) Leaders distribute earnings, Potters et al. (2006) They move first on the basis of additional information, Meidinger

and Villeval (2002) Leaders are endogenously determined and move first, Gächter and

Renner (2005), Arbak and Villeval (2007) Take the lead!

Endogenous leadership: anyone can be the leader Horizontal game: Leaders and followers make the very same

decisions Leaders cannot sanction followers: No sanctions, no punishment,

no informal peer pressure = low powered incentive system Leading by example is endogenous, costless but strategically risky

Motivation (II)

Take the lead! Endogenous leadership

Anyone can be the leader, in any period Horizontal game

Leaders and followers make the very same decisions Leaders cannot sanction followers

No sanctions, no punishment, no informal peer pressure = low powered incentive system

Leading by example Example is based on available information

Becoming a leader is costless but strategically risky A strong test for leading by example

Experimental Design

The game A standard linear public goods game (VCM)

MPCR=.5; group size =4; 10+10 rounds; 50 tokens; partners

Croson, Fatas and Neugebauer (EL, 2005) Treatments differ on the available information set

Follow the good leader treatment (FGL) Available information: highest contribution

Follow the bad leader treatment (FBL) Available information: lowest contribution

Natural baseline CFN Available information: vector of contributions, no trace

Standard experimental procedures

Results (I) Good leaders matter

Results (I) Good leaders matter

Results (II)

Endogenous leadershipGood leaders contribute more

Bad leaders do notVCM = 100

0

100

Highest Lowest

FGLFBL

Results (III)

The role of information

Table 3: Conditional cooperation patternRandom effects regression results; Dependent Variable: Individual contributions

FGL R01-10 R11-20 FBL R01-10 R11-20

Constant 23.63***

(3.58) 26.36***

(3.51) 16.92***

(4.356)*

11.66***

(1.84) 12.00***

(1.95) 9.38***

(2.28)

Restart -5.49***

(1.42) -1.63***

(0.57) Period -1.07***

(0.20)-1.27***

(0.23)-0.90***

(0.32)-0.62***

(0.16)-0.65***

(0.20)-0.63**

(0.26) LagHigh 0.09*

(0.05) 0.05

(0.07) 0.10(0.07)

LagLow 0.79***

(0.15) 0.75*** (0.17)

0.93***

(0.09) Nº Obs 648 324 324 648 324 324

Subjects do not follow good leaders, they pay attention to the bad ones

Concluding remarks Leadership significantly increases effort levels

(contribution) The usual PGG decline holds Good leaders contribute significantly more,

while bad leaders are not ashamed of their low contribution levels

Subjects follow bad leaders (instead of good ones)

“Don’t follow the leader, watch your parkimeter!” (Bob Dylan)