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Asking One Too Many? Why Leaders Need to Be Decisive

  • Junichiro Ishida
  • Takashi Shimizu

It is often touted that decisiveness is one of the most important qualities to be possessed by leaders, broadly defined. To see how and why decisiveness can be a valuable asset in organizations, we construct a model of strategic information transmission where: (i) a decision maker solicits opinions sequentially from experts; (ii) how many experts to solicit opinions from is the decision maker's endogenous choice. We show that communication is less efficient when the decision maker is indecisive and cannot resist the temptation to ask for a second opinion. This result suggests that the optimal diversity of information sources depends critically on the strategic nature of communication: when communication is strategic, it is optimal to delegate information acquisition to a single party and rely exclusively on it; when it is not, it is optimal to diversify information sources and aggregate them via communication.

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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0857.

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Date of creation: Oct 2012
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Handle: RePEc:dpr:wpaper:0857
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  1. David P. Myatt & Torun Dewan, 2006. "Leading the Party: Coordination, Direction, and Communication," Economics Series Working Papers 280, University of Oxford, Department of Economics.
  2. Philippe Aghion & Jean Tirole, 1994. "Formal and Real Authority in Organizations," Working papers 95-8, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Ben Hermalin, 1996. "Toward an Economic Theory of Leadership: Leading by Example," Working Papers _006, University of California at Berkeley, Haas School of Business.
  4. Jan Zabojnik, 2002. "Centralized and Decentralized Decision Making in Organizations," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 1-22, January.
  5. Austen-Smith David, 1993. "Interested Experts and Policy Advice: Multiple Referrals under Open Rule," Games and Economic Behavior, Elsevier, vol. 5(1), pages 3-43, January.
  6. Julio Rotemberg & Garth Saloner, 2000. "Visionaries, Managers, and Strategic Direction," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 693-716, Winter.
  7. Junichiro Ishida & Takashi Shimizu, 2009. "Cheap Talk with an Informed Receiver," ISER Discussion Paper 0746, Institute of Social and Economic Research, Osaka University.
  8. Torun Dewan & David P. Myatt, 2007. "The Qualities of Leadership:Direction, Communication, and Obfuscation," STICERD - Political Economy and Public Policy Paper Series 24, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  9. Andrea Galeotti & Christian Ghiglino & Francesco Squintani, 2009. "Strategic Information Transmission in Networks," Economics Discussion Papers 668, University of Essex, Department of Economics.
  10. Van den Steen, Eric, 2003. "Organizational Beliefs and Managerial Vision," Working papers 4224-01, Massachusetts Institute of Technology (MIT), Sloan School of Management.
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