The price of leadership: an experiment

Seminari Micro

Giovanni Ponti (with M.Sartarelli, I.Sykora & V.Zhukova)

Universidad de Alicante

27-Jan-2014

Seminar 3 – 14:30

Leadership is an important aspect of life in a community, although surprisingly little is known about its determinants. In a laboratory experiment we elicit individuals’ preferences to be one type of leader: entrepreneurs. Their salient feature is that they stand out to implement a valuable project by hiring employees and by claiming the residual profit after paying the employees for their contribution to the project. We find that the probability to be leader decreases with individuals’ guilt, agreeableness and wealth, is lower for females and varies non-linearly with the 2-4 digit ratio. The type of contract which the leaders offer to followers also varies with individuals’ characteristics. Finally, the value of a leader’s project and the mechanism to select leaders also affect individuals’ choices.