Advanced Search
MyIDEAS: Login

Leadership and incentives

Contents:

Author Info

  • Cappelen, Alexander W.

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Reme, Bjørn-Atle

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Sørensen, Erik Ø.

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Tungodden, Bertil

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

We study how leader compensation affects public goods provision. We report from a lab experiment with four treatments, where the base treatment was a standard public goods game with simultaneous contribution decisions, while the three other treatments allowed participants to volunteer to be the leader in their group and make their contribution before the others. In the three leader treatments, we manipulate the level of compensation given to the leader. Our main finding is that a moderate compensation to the leader is highly beneficial, it increases the average contribution by 63% relative to a situation where the leader is not compensated and by more than 90% relative to a situation without a leader. A further increase in the leader compensation, however, is detrimental to public goods provision; it attracts less morally motivated leaders and creates a social crowding-out effect that makes it harder to lead by example. Finally, we report from a survey showing that the social crowding-out effect is also present in the population at large. We argue that the main findings of the paper are important in many real life settings where we would like to use economic incentives to encourage people to lead by example.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://brage.bibsys.no/xmlui/bitstream/handle/11250/163446/1/SAM0214.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 2/2014.

as in new window
Length: 21 pages
Date of creation: 11 Feb 2014
Date of revision:
Handle: RePEc:hhs:nhheco:2014_002

Contact details of provider:
Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Phone: +47 55 959 277
Fax: 5595 9100
Email:
Web page: http://www.nhh.no/sam/
More information through EDIRC

Related research

Keywords: Lab experiment; leadership; compensation.;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Simon Gaechter & Daniele Nosenzo & Elke Renner & Martin Sefton, 2009. "Who Makes A Good Leader? Cooperativeness, Optimism And Leading-By-Example," Discussion Papers 2009-19, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Urs Fischbacher & Simon Gaechter, 2009. "Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Good Experiments," Discussion Papers 2009-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Gürerk, Özgür & Irlenbusch, Bernd & Rockenbach, Bettina, 2009. "Motivating teammates: The leader's choice between positive and negative incentives," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 591-607, August.
  4. Simon Gaechter & Benedikt Herrmann & Christian Thoeni, 2010. "Culture and Cooperation," Discussion Papers 2010-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  5. Lester M. Salamon & S. Wojciech Sokolowski & Megan A. Haddock, 2011. "Measuring The Economic Value Of Volunteer Work Globally: Concepts, Estimates, And A Roadmap To The Future," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(3), pages 217-252, 09.
  6. Gneezy, U. & Rustichini, A., 1998. "Pay Enough - Or Don't Pay at All," Discussion Paper 1998-57, Tilburg University, Center for Economic Research.
  7. Jan Potters & Martin Sefton & Lise Vesterlund, 2007. "Leading-by-example and signaling in voluntary contribution games: an experimental study," Economic Theory, Springer, vol. 33(1), pages 169-182, October.
  8. Emrah Arbak & Marie-Claire Villeval, 2007. "Endogenous Leadership Selection and Influence," Post-Print halshs-00142461, HAL.
  9. Moxnes, E. & Heijden, E.C.M. van der, 2000. "The Effect of Leadership in a Public Bad Experiment," Discussion Paper 2000-102, Tilburg University, Center for Economic Research.
  10. Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-55, September.
  11. M. Vittoria Levati & Matthias Sutter & Eline van der Heijden, 2007. "Leading by Example in a Public Goods Experiment with Heterogeneity and Incomplete Information," Journal of Conflict Resolution, Peace Science Society (International), vol. 51(5), pages 793-818, October.
  12. Haigner, Stefan D. & Wakolbinger, Florian, 2010. "To lead or not to lead: Endogenous sequencing in public goods games," Economics Letters, Elsevier, vol. 108(1), pages 93-95, July.
  13. Rivas, M. Fernanda & Sutter, Matthias, 2011. "The benefits of voluntary leadership in experimental public goods games," Economics Letters, Elsevier, vol. 112(2), pages 176-178, August.
  14. Roland Benabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Wiley Blackwell, vol. 70(3), pages 489-520, 07.
  15. Andreas Glöckner & Bernd Irlenbusch & Sebastian Kube & Andreas Nicklisch & Hans‐Theo Normann, 2011. "Leading With(Out) Sacrifice? A Public‐Goods Experiment With A Privileged Player," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 591-597, 04.
  16. Uri Gneezy & Stephan Meier & Pedro Rey-Biel, 2011. "When and Why Incentives (Don't) Work to Modify Behavior," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 191-210, Fall.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hhs:nhheco:2014_002. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dagny Hanne Kristiansen).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.