LEADERSHIP BY EXAMPLE IN THE WEAK-LINK GAME

What is it about?

In a weak link or minimum effort game there is a group of people who individually contribute towards a group project. The output of the project is determined by the minimum effort within the group. For instance, if the group project is an edited book then the book is delayed until all authors have contributed their section of the book. So, it is the slowest contributor to deliver that determines the overall delay in production. The efficient Nash equilibrium in a weak link game is for all group members to exert high effort. It only takes, however, one individual to exert low effort for the high effort of others to be wasted. And typically, in the experimental lab, group effort tends to fall over time towards the inefficient equilibrium of low effort. In this paper we question whether leadership by example can help keep effort at a more efficient, high level. Specifically, we consider a setting where one member of the group chooses effort before the other members of the group. This leader or first mover can, by choosing high effort, send a credible signal to other members of the group that they should also choose high effort. We compare both exogenous and endogenous leadership. We find that leadership does increase average effort in the group. But, the increase is not as large as one might have hoped for and effort remains well below the efficient level. Our investigation of why leadership fails to produce a bigger rise in effort primarily focuses on leaders. In particular, we found that if the leader chose high effort then this did increased group effort. So, followers were willing to act on the leader’s signal. Most leaders, however, did not chose high effort. This is likely because choosing high effort is risky. While leadership did not dramatically increase average effort it did have one crucial benefit - it helped groups overcome coordination failure. In the standard weak link game we typically observe that groups get stuck in a low effort trap from which they cannot escape. With leadership, by contrast, low effort was much less persistent. Again, if leaders chose high effort then followers tended to respond. This meant that some group could escape a low effort trap.

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