Raising the Price of Talk: An Experimental Analysis of Transparent Leadership

47 Pages Posted: 19 May 2014

See all articles by Daniel Houser

Daniel Houser

George Mason University - Department of Economics; Interdisciplinary Center for Economic Science; George Mason University - Mercatus Center

David M. Levy

George Mason University - Center for Study of Public Choice

Kail Padgitt

George Mason University

Sandra J. Peart

University of Richmond - Jepson School of Leadership Studies

Erte Xiao

Monash University

Date Written: May 17, 2014

Abstract

Does transparent leadership promote cooperative groups? We address this issue using a public goods experiment with exogenously selected leaders who are able to send non-binding contribution suggestions to the group. To investigate the effect of transparency in this setting we vary the ease with which a leader’s actions are known by the group. We find leaders’ suggestions encourage cooperation in all treatments, but that both leaders and their group members are more likely to follow leaders’ recommendations when institutions are transparent so that non-leaders can easily see what the leader does. Consequently, transparency leads to significantly more cooperation, higher group earnings and reduced variation in contributions among group members.

Keywords: Selfless behavior, Transparency, Experimental economics

JEL Classification: C91, C92

Suggested Citation

Houser, Daniel and Levy, David M. and Padgitt, Kail and Peart, Sandra J. and Xiao, Erte, Raising the Price of Talk: An Experimental Analysis of Transparent Leadership (May 17, 2014). GMU Working Paper in Economics No. 14-12, Available at SSRN: https://ssrn.com/abstract=2438259 or http://dx.doi.org/10.2139/ssrn.2438259

Daniel Houser (Contact Author)

George Mason University - Department of Economics ( email )

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George Mason University - Mercatus Center ( email )

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David M. Levy

George Mason University - Center for Study of Public Choice ( email )

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Kail Padgitt

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

Sandra J. Peart

University of Richmond - Jepson School of Leadership Studies ( email )

Jepson Hall
Richmond, VA 23173
United States

Erte Xiao

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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