Leadership and Credibility in N-Person Coordination Games

It is often assumed that leaders serve as focal points around which followers rally when confronted with a coordination problem. This research begins with one component of leadership—its coordinating role—and disentangles how leadership matters for followers. This analysis proceeds as a simple one-sided signaling game from leaders to followers and investigates when a leader's signals are credible. The empirical analysis is based on a series of laboratory experiments in which groups of four actors were involved in a series of one-stage coordination games. The findings show that although leadership is crucial for coordinating followers, it is not a panacea. The introduction of uncertainty about the type of leader markedly decreases the ameliorating impact of leadership.