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Leadership by Confidence in Teams

  • Kobayashi, Hajime
  • Suehiro, Hideo

We study endogenous signaling in teams 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 sufficient condition under which sender and receiver emerge endogenously in a stable equilibrium. This result implies that leadership in teams emerges through the leader's signaling incentives only based on his confidence.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10717.

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Date of creation: 07 Jul 2008
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Handle: RePEc:pra:mprapa:10717
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  1. 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 1039-66, October.
  2. Kambe, Shinsuke, 1999. "Bargaining with Imperfect Commitment," Games and Economic Behavior, Elsevier, vol. 28(2), pages 217-237, August.
  3. van Damme, E.E.C. & Hurkens, S., 1998. "Endogenous Stackelberg leadership," Other publications TiSEM fc1a6ca3-d618-4bc5-a115-f, Tilburg University, School of Economics and Management.
  4. Rabah Amir & Anna Stepanova, 2000. "Second-Mover Advantage and Price Leadership in Bertrand Duopoly," CIE Discussion Papers 2000-10, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  5. Ben Hermalin, 1996. "Toward an Economic Theory of Leadership: Leading by Example," Working Papers _006, University of California at Berkeley, Haas School of Business.
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  8. van Damme, Eric & Hurkens, Sjaak, 2004. "Endogenous price leadership," Games and Economic Behavior, Elsevier, vol. 47(2), pages 404-420, May.
  9. Gal-Or, Esther, 1987. "First Mover Disadvantages with Private Information," Review of Economic Studies, Wiley Blackwell, vol. 54(2), pages 279-92, April.
  10. Chamley, Christophe & Gale, Douglas, 1994. "Information Revelation and Strategic Delay in a Model of Investment," Econometrica, Econometric Society, vol. 62(5), pages 1065-85, September.
  11. David M Kreps & Robert Wilson, 2003. "Sequential Equilibria," Levine's Working Paper Archive 618897000000000813, David K. Levine.
  12. 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.
  13. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
  14. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
  15. Hans-Theo Normann, 1997. "Endogenous Stackelberg equilibria with incomplete information," Journal of Economics, Springer, vol. 66(2), pages 177-187, June.
  16. 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.
  17. Hajime Kobayashi & Hideo Suehiro, 2005. "Emergence Of Leadership In Teams," The Japanese Economic Review, Japanese Economic Association, vol. 56(3), pages 295-316.
  18. 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.
  19. Fudenberg, Drew & Tirole, Jean, 1986. "A Theory of Exit in Duopoly," Econometrica, Econometric Society, vol. 54(4), pages 943-60, July.
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