Leadership by Confidence in Teams

Hajime Kobayashi and Hideo Suehiro
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Hajime Kobayashi: School of Economics, Osaka Prefecture University
Hideo Suehiro: Graduate School of Business Administration, Kobe University

No 2008-35, Discussion Papers from Kobe University, Graduate School of Business Administration

Abstract: 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.

Keywords: Endogenous signaling; Endogenous timing; Signaling; Value of information; Leadership; Team production (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008-07
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