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Leadership by Confidence in Teams

Listed author(s):
  • Hajime Kobayashi

    (School of Economics, Osaka Prefecture University)

  • Hideo Suehiro

    (Graduate School of Business Administration, Kobe University)

Registered author(s):

    We study endogenous signaling by analyzing a team production problem with endogenous timing. Each agent of the team is privately endowed with some level of confidence about team productivity. Each of them must then commit a level of effort in one of two periods. At the end of each period, each agent observes his partner' s move in this period. Both agents are rewarded by a team output determined by team productivity and total invested effort. Each agent must personally incur the cost of effort that he invested. We show a set of sufficient conditions under which an agent chooses to become a leader or a follower depending on his confidence about reward from the team in a stable equilibrium. This means that a player endogenously becomes a signal sender or a signal receiver depending only on the cost-benefits from becoming a sender or a receiver.

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    File URL: http://www.b.kobe-u.ac.jp/paper/2008_35.pdf
    File Function: First version, 2008
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    Paper provided by Kobe University, Graduate School of Business Administration in its series Discussion Papers with number 2008-35.

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    Length: 23 pages
    Date of creation: Jul 2008
    Handle: RePEc:kbb:dpaper:2008-35
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    Web page: http://www.b.kobe-u.ac.jp/repec/kbb/

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    1. Amir, Rabah & Stepanova, Anna, 2006. "Second-mover advantage and price leadership in Bertrand duopoly," Games and Economic Behavior, Elsevier, vol. 55(1), pages 1-20, April.
    2. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    3. Mailath George J., 1993. "Endogenous Sequencing of Firm Decisions," Journal of Economic Theory, Elsevier, vol. 59(1), pages 169-182, February.
    4. Normann, Hans-Theo, 2002. "Endogenous Timing with Incomplete Information and with Observable Delay," Games and Economic Behavior, Elsevier, vol. 39(2), pages 282-291, May.
    5. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    6. van Damme, Eric & Hurkens, Sjaak, 1999. "Endogenous Stackelberg Leadership," Games and Economic Behavior, Elsevier, vol. 28(1), pages 105-129, July.
    7. Chamley, Christophe & Gale, Douglas, 1994. "Information Revelation and Strategic Delay in a Model of Investment," Econometrica, Econometric Society, vol. 62(5), pages 1065-1085, September.
    8. Kambe, Shinsuke, 1999. "Bargaining with Imperfect Commitment," Games and Economic Behavior, Elsevier, vol. 28(2), pages 217-237, August.
    9. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, vol. 88(5), pages 1188-1206, December.
    10. Gul, Faruk & Lundholm, Russell, 1995. "Endogenous Timing and the Clustering of Agents' Decisions," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1039-1066, October.
    11. Hans-Theo Normann, 1997. "Endogenous Stackelberg equilibria with incomplete information," Journal of Economics, Springer, vol. 66(2), pages 177-187, June.
    12. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 179-221.
    13. Kenneth Hendricks & Dan Kovenock, 1989. "Asymmetric Information, Information Externalities, and Efficiency: The Case of Oil Exploration," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 164-182, Summer.
    14. Esther Gal-Or, 1987. "First Mover Disadvantages with Private Information," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 279-292.
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