EconPapers    
Economics at your fingertips  
 

Voluntary contributions in cascades: The tragedy of ill-informed leadership

Béatrice Boulu-Reshef () and Nina Rapoport ()

Post-Print from HAL

Abstract: Voluntary contributions are often solicited in sequential and public settings where information on the quality of the fundraising project unfolds with the sequence of decisions. This paper examines how the different sources of information available to potential donors in such settings influence their decision-making. Contrary to most of the leadership literature, neither leaders nor followers in these settings have certainty about the quality of the fundraising project. We explore whether leaders remain influential, the extent to which they use their influence strategically, and the consequences on followers when leaders are misinformed. We combine an information cascade method with a modified public goods game to create a "Voluntary Contributions in Cascades" paradigm. Participants sequentially receive private signals about the state of the world, which determines the potential returns from the public good, and take two public actions: an incentivized prediction about the state of the world and a contribution to the public good. We find that participants' predictions mostly align with Bayesian predictions, and find no evidence for strategic or misleading predictions. Leaders' contributions are positively correlated with followers', suggesting they remain influential despite their limited informational advantage. This influence takes a tragic turn when leaders happen to be misinformed, as most misinformed leaders end up unintentionally misleading followers. We find that having a misleading leader is associated with a reduction in gains from contributions roughly twice as large as the reduction that stems from dividing the marginal-per-capita-return by two. Our results stress the significance of having well-informed leaders.

Keywords: voluntary contribution; information cascade; fundraising; sequential public good game; leadership (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-dev and nep-exp
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02977853
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published in 2020

Downloads: (external link)
https://halshs.archives-ouvertes.fr/halshs-02977853/document (application/pdf)

Related works:
Working Paper: Voluntary contributions in cascades: The tragedy of ill-informed leadership (2020) Downloads
Working Paper: Voluntary contributions in cascades: The tragedy of ill-informed leadership (2020) Downloads
Working Paper: Voluntary contributions in cascades: The tragedy of ill-informed leadership (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-02977853

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2021-09-12
Handle: RePEc:hal:journl:halshs-02977853