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The Impact of Leadership Incentives in Intergroup Contests

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  • Gerald Eisenkopf

    ()
    (Department of Economics, University of Konstanz, Germany)

Abstract

The heterogeneous effort supply in intergroup contests explains why groups have a manager. However, the objectives of group managers and members often differ. Using data from an experiment this paper studies whether this conflict of interests affects leadership effectiveness. The managers have an advisory role only and cannot change the monetary incentives of the group members in any context. Depending on the treatment some managers prefer more competition than the group members, some less, and some do not have any incentive at all. The results show that managers can coordinate their groups rather effectively. Their incentives shape the competitive behavior of the 'subordinates'. However group members follow the non-binding investment recommendations of their group manager more closely if management compensation is not incentivized.

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Bibliographic Info

Paper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2013-06.

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Length: 35 pages
Date of creation: 26 Mar 2013
Date of revision:
Handle: RePEc:knz:dpteco:1306

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Related research

Keywords: Communication; Experiment; Rent-seeking; Management compensation; Group decision making;

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  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. Guth, Werner & Levati, M. Vittoria & Sutter, Matthias & van der Heijden, Eline, 2007. "Leading by example with and without exclusion power in voluntary contribution experiments," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1023-1042, June.
  3. Shaun P. Hargreaves Heap & Daniel John Zizzo, 2009. "The Value of Groups," American Economic Review, American Economic Association, vol. 99(1), pages 295-323, March.
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