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Preference Communication and Leadership in Group Decision-Making

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  • Seda Ertac

    ()
    (Department of Economics, Koc University)

  • Mehmet Y. Gurdal

    ()
    (Department of Economics, Bogazici University)

Abstract

We report results from a laboratory experiment that explores the effects of preference communication and leader selection mechanisms in group decision-making. In a setting where all members of a group get the same payoff based on the group leader’s decision of how much risk to take, we study the effects of two treatment variables: (1) whether group members can communicate their preferences to the leader, (2) whether the leader is exogenously appointed or voluntarily self-selects into the position. We find that the leader selection mechanism crucially affects the integration of group preferences into the leader’s decision: the communicated preferences have a significant effect on the actual group decision only when the leader is appointed. We also find that preference communication by non-leaders is frequently strategic.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1324.pdf
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Bibliographic Info

Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1324.

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Length: 28 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:koc:wpaper:1324

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Related research

Keywords: group decision-making; risk; leadership; delegation; advice; information; experiments.;

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References

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  1. Seda Ertac & Mehmet Y. Gurdal, 2010. "Deciding to Decide: Gender, Leadership and Risk-Taking in Groups," Koç University-TUSIAD Economic Research Forum Working Papers 1028, Koc University-TUSIAD Economic Research Forum.
  2. Boðaçhan Çelen & Shachar Kariv & Andrew Schotter, 2006. "An Experimental Test of Advice and Social Learning," Levine's Bibliography 784828000000000272, UCLA Department of Economics.
  3. Gary Charness & Luca Rigotti & Aldo Rustichini, 2007. "Individual Behavior and Group Membership," American Economic Review, American Economic Association, vol. 97(4), pages 1340-1352, September.
  4. Kocher, Martin G. & Pogrebna, Ganna & Sutter, Matthias, 2009. "Other-Regarding Preferences and Leadership Styles," IZA Discussion Papers 4080, Institute for the Study of Labor (IZA).
  5. Gneezy, U. & Potters, J.J.M., 1997. "An experiment on risk taking and evaluation periods," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73908, Tilburg University.
  6. Gary Charness & Edi Karni & Dan Levin, 2012. "Ambiguity Attitudes and Social Interactions: An Experimental Investigation," Economics Working Paper Archive 590, The Johns Hopkins University,Department of Economics.
  7. Schotter, Andrew & Sopher, Barry, 2007. "Advice and behavior in intergenerational ultimatum games: An experimental approach," Games and Economic Behavior, Elsevier, vol. 58(2), pages 365-393, February.
  8. 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.
  9. Seda Ertac & Mehmet Y. Gurdal, 2012. "Personality, Group Decision-Making and Leadership," Koç University-TUSIAD Economic Research Forum Working Papers 1227, Koc University-TUSIAD Economic Research Forum.
  10. David J. Cooper & John H. Kagel, 2005. "Are Two Heads Better Than One? Team versus Individual Play in Signaling Games," American Economic Review, American Economic Association, vol. 95(3), pages 477-509, June.
  11. Matthias Sutter, 2008. "Individual behavior and group membership: Comment," Working Papers 2008-23, Faculty of Economics and Statistics, University of Innsbruck.
  12. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  13. Andrew Schotter & Barry Sopher, 2003. "Social Learning and Coordination Conventions in Intergenerational Games: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 498-529, June.
  14. Masclet, David & Colombier, Nathalie & Denant-Boemont, Laurent & Lohéac, Youenn, 2009. "Group and individual risk preferences: A lottery-choice experiment with self-employed and salaried workers," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 470-484, June.
  15. Robert S. Shupp & Arlington Williams, 2003. "Risk Preference Differentials of Small Groups and Individuals," Working Papers 200301, Ball State University, Department of Economics, revised Apr 2006.
  16. Gary Charness & Matthias Sutter, 2012. "Groups Make Better Self-Interested Decisions," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 157-76, Summer.
  17. Ertaç, Seda & Hortaçsu, Ali & Roberts, James W., 2011. "Entry into auctions: An experimental analysis," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 168-178, March.
  18. Andrew Schotter & Barry Sopher, 2006. "Trust and trustworthiness in games: An experimental study of intergenerational advice," Experimental Economics, Springer, vol. 9(2), pages 123-145, June.
  19. Emrah Arbak & Marie-Claire Villeval, 2013. "Voluntary leadership: motivation and influence," Social Choice and Welfare, Springer, vol. 40(3), pages 635-662, March.
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