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Leadership, Information, and Risk Attitude: A Game Theoretic Approach

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Author Info

  • John T. Kulas
  • Mana Komai
  • Saint Cloud State University
  • Philip J. Grossman

Abstract

This paper experimentally investigates how risk attitudes mitigate leadership effectiveness in a collective setting with projects that exhibit both free riding and coordination problems. We take two novel approaches: 1) the introduction of economic game theory to psychological studies of leadership, and 2) the application of the leadership ontology of Drath et al. (2008) as a crossdisciplinary integrative framework. Leadership here is focused on the presence or absence of direction, alignment, and commitment as well as antecedent beliefs and practices that are held within a collective (for us, our experimental participants). Our leadership context is stripped down to very minimal conditions: three group members, an investment decision, and the introduction of information regarding group members' attitudes toward risk. We find that the mere mention of risk attitude (whether risky or risk averse) undermines leadership effectiveness in mitigating free riding for our 420 experimental participants. Our study’s primary implications lie in the application of game theory methodology to the psychological study of leadership, the introduction of relevant individual difference constructs to economic studies of leadership, and the advocation of the Drath et al. (2008) framework as a helpful integrative mechanism for interdisciplinary leadership research.

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Bibliographic Info

Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 30-13.

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Length: 46 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:mos:moswps:2013-30

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Keywords: game theory; risk attitude; interdisciplinary research; group dynamics;

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