When Should Leaders Share Information with their Subordinates?

Abstract:     
We show that when leaders share some of their information with subordinates, decision-making is subject to a motivational bias; leaders make the decisions their subordinates want to see. As this bias increases with the quality of the shared information, an improvement of an organisation's information might even decrease its efficiency. As a consequence, information-sharing is not always optimal. We show however that self-confidence can help the leader to overcome his motivational bias, thus making information-sharing more attractive. Conversely we find that information-sharing can help to curb the autocratic tendencies of a self-confident leadership. We conclude that a policy of information-sharing and the appointment of a self-confident leadership are most effective when they go hand in hand.

Number of Pages in PDF File: 31

Keywords: leadership, transparency, motivation, organisational design

JEL Classification: D02, D23, L29

working papers series