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Leading by example? Investment decisions in a mixed sequential-simultaneous public bad experiment

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Author Info
Heijden, E. van der
Moxnes, E. (Tilburg University, Center for Economic Research)

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Abstract

This paper investigates the effect of having a leader in a laboratory public bad experiment with five subjects in each group. The control treatment is a standard public bad experiment, while in the leader treatments the design is such that in each group the leader decides first on his or her investment in the public bad. After being informed about the leader s decision, the four followers in each group make their investment decision. Two treatments of the leadership game are played with each group. In the same-leader-costs treatment, all subjects are confronted with the same costs, while in the no-leader-costs treatment the leader faces no direct costs of acting socially. It is found that followers invest significantly less in the public bad when there is a leader compared with a situation when there is no leader. Comparing the two treatments, we find, moreover, that the leadership effect is somewhat stronger when leaders face the same costs as followers compared with the situation in which leaders bear no costs. Randomly chosen leaders set an example by investing less than average players in a standard public bad game, and leader investments are lowest when the costs of leading are low.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 38.

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Date of creation: 2003
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Handle: RePEc:dgr:kubcen:200338

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Related research
Keywords: experiment; leadership;

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Find related papers by JEL classification:
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December. [Downloadable!] (restricted)
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  5. Heijden, E. van der & Moxnes, E., 1999. "Information feedback in public-bad games : a cross-country experiment," Discussion Paper 102, Tilburg University, Center for Economic Research. [Downloadable!]
  6. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June. [Downloadable!] (restricted)
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  7. Moxnes, E. & Heijden, E. van der, 2000. "The effect of leadership in a public bad experiment," Discussion Paper 102, Tilburg University, Center for Economic Research. [Downloadable!]
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  14. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, vol. 88(5), pages 1188-1206, December. [Downloadable!] (restricted)
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  15. Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Werner Güth & M. Vittoria Levati & Matthias Sutter & Eline van der Heijden, 2006. "Leading by example with and without exclusion power in voluntary contribution experiments," Papers on Strategic Interaction 2006-35, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
    Other versions:
  2. Werner Güth & M. Vittoria Levati & Matthias Sutter & Eline van der Heijden, 2004. "Leadership and cooperation in public goods experiments," Papers on Strategic Interaction 2004-29, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
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