Leading the Ignorant: Can Ignorance Eliminate the Free Riding Problem?

Mana Komai
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Mana Komai: State University Minosota

Iranian Economic Review (IER), 2007, vol. 12, issue 3, 127-145

Abstract: This paper suggests that even if it is costless to inform all team members about the quality of a project, there are reasons to concentrate information in the hands of one person (a leader) and prevent full revelation to the rest. This deprives others of the information necessary for profitable defections; they (the followers) therefore will have no reasonable strategy other than following the informed leader because he has more information than they themselves have. Such leaders then can lead the ignorant group into cooperation in cases where information gives them an incentive not to do so. Unlike the common belief, this paper shows that lack of information transparency in a group or an organization may increase cooperation and thus efficiency compare to a regime of information dispersal.

Keywords: Leadership; Information transparency; cooperation; Incentives (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:12:y:2007:i:3:p:127

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