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Leadership based on asymmetric information

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  • Mana Komai
  • Mark Stegeman

Abstract

Rational players, unconstrained by contracts or formal authority, choose to follow a better‐informed leader, whose action reveals part of her information. If the leader satisfies a credibility condition, then the unique nondegenerate equilibrium solves distinct shirking and coordination problems and achieves the first best. If credibility fails, as is more likely for a large organization, then followers ignore the leader, and equilibria are very inefficient. Appointing multiple leaders, or a high‐cost leader, can restore credibility. If players invest privately in information, then a leader often appears endogenously. The equilibrium concept is an original extension of sequential equilibrium to continuous states.

Suggested Citation

  • Mana Komai & Mark Stegeman, 2010. "Leadership based on asymmetric information," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 35-63, March.
    • Handle: RePEc:bla:randje:v:41:y:2010:i:1:p:35-63
    DOI: 10.1111/j.1756-2171.2009.00089.x
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    References listed on IDEAS

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    Cited by:

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    3. Robert (A.J.) Dur & Ola Kvaloy & Anja Schottner, 2018. "Non-Competitive Wage-Setting as a Cause of Unfriendly and Inefficient Leadership," Tinbergen Institute Discussion Papers 18-094/VII, Tinbergen Institute.
    4. Philip J. Grossman & Mana Komai & James E. Jensen, 2015. "Leadership and gender in groups: An experiment," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 368-388, February.
    5. Béatrice BOULU-RESHEF & Nina RAPOPORT, "undated". "Voluntary contributions in cascades: The tragedy of ill-informed leadership," LEO Working Papers / DR LEO 2824, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    6. Bryan C. McCannon, 2018. "Leadership and motivation for public goods contributions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(1), pages 68-96, February.
    7. Kvaløy, Ola & Schöttner, Anja, 2015. "Incentives to motivate," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 26-42.
    8. Kim, Jaesoo, 2012. "Endogenous leadership in incentive contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 256-266.
    9. Gershkov, Alex & Li, Jianpei & Schweinzer, Paul, 2016. "How to share it out: The value of information in teams," Journal of Economic Theory, Elsevier, vol. 162(C), pages 261-304.
    10. Mana Komai & Philip J. Grossman & Evelyne Benie, 2017. "Leadership and the effective choice of information regime," Theory and Decision, Springer, vol. 82(1), pages 117-129, January.
    11. Béatrice Boulu-Reshef & Nina Rapoport, 2020. "Voluntary contributions in cascades: The tragedy of ill-informed leadership," Documents de travail du Centre d'Economie de la Sorbonne 20023, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    12. Oliver Masakure, 2012. "An empirical test of Lazear's leadership theory using evidence from Ghana," Applied Economics Letters, Taylor & Francis Journals, vol. 19(1), pages 79-82, January.
    13. Robert Dur & Ola Kvaløy & Anja Schöttner, 2022. "Leadership Styles and Labor Market Conditions," Management Science, INFORMS, vol. 68(4), pages 3150-3168, April.
    14. Zhou, Junjie, 2016. "Economics of leadership and hierarchy," Games and Economic Behavior, Elsevier, vol. 95(C), pages 88-106.
    15. Selhan Garip Sahin & Catherine Eckel & Mana Komai, 2015. "An experimental study of leadership institutions in collective action games," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 100-113, July.
    16. Panagiotis Kyriazis & Edmund Lou, 2023. "It's Not Always the Leader's Fault: How Informed Followers Can Undermine Efficient Leadership," Papers 2307.13841, arXiv.org, revised Aug 2023.
    17. Molle, Mana Komai & Grossman, Philip J. & Kulas, John T. & Lo, Siu Pong, 2023. "Does a leader's self-assessed integrity matter?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 104(C).
    18. Jones, Daniel B., 2017. "Too much information? An experiment on communication and cooperation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 29-39.
    19. Dur, Robert & Kvaløy, Ola & Schöttner, Anja, 2020. "Labor-Market Conditions and Leadership Styles," IZA Discussion Papers 13860, Institute of Labor Economics (IZA).
    20. Torben K. Mideksa, 2021. "Leadership and Climate Policy," CESifo Working Paper Series 9054, CESifo.
    21. Feltovich, Nick & Grossman, Philip J., 2015. "How does the effect of pre-play suggestions vary with group size? Experimental evidence from a threshold public-good game," European Economic Review, Elsevier, vol. 79(C), pages 263-280.
    22. Stone, Daniel F. & Miller, Steven J., 2013. "Leading, learning and herding," Mathematical Social Sciences, Elsevier, vol. 65(3), pages 222-231.
    23. Lazear, Edward P., 2012. "Leadership: A personnel economics approach," Labour Economics, Elsevier, vol. 19(1), pages 92-101.

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