Leadership and incentives

Alexander Cappelen, Bjørn-Atle Reme (bjorn.reme@nhh.no), Erik Sørensen and Bertil Tungodden
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Bjørn-Atle Reme: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway, http://www.nhh.no/en/research-faculty/department-of-economics/sam/cv/reme--bj%F8rn-atle.aspx

No 10/2013, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: We study whether compensating people who volunteer to be leaders in a public goods game creates a social crowding-out effect of moral motivation among the others in the group. We report from an experiment with four treatments, where the base treatment is a standard public goods game with simultaneous contribution decisions, while the three other treatments allowed participants to volunteer to be an “early contributor” in their group. In the three leader treatments, we manipulate the level of compensation given to the leader. Our main finding is that a moderate compensation to the leader is highly beneficial, it increases the average contribution by almost 80%. A high compensation, however, is detrimental to public good provision. We show that paying a moderate compensation to the leaders strikes the right balance between the need for recruiting leaders and avoiding a large social crowding-out effect. We argue that the main findings of the paper are important in many real life settings where we would like to use economic incentives to encourage people to lead by example.

Keywords: Voluntariness; Group behavior; Public goods; Laoratory. (search for similar items in EconPapers)
JEL-codes: C72 C92 H41 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2013-04-12
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-evo, nep-exp, nep-gth, nep-hrm, nep-lab and nep-soc
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Leadership and Incentives (2016)
Working Paper: Leadership and incentives (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhheco:2013_010

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