Public Goods, Signaling, and Norms of Conscientious Leadership

35 Pages Posted: 26 Jan 2017  

J. Atsu Amegashie

University of Guelph - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: December 19, 2016

Abstract

I study a sequential-move public goods game based on the notion that leadership comes with an obligation; conscientious leadership. Provision by the leader of an amount of the public good below a minimum imposes a psychological cost on the follower which increases his unit cost of contribution. The leader has private information about his type and his cost of contributing to the public good. The model combines a follower’s concern for fairness and informational signaling about conscientious leadership. I find that, under certain conditions, the follower’s equilibrium contribution is an increasing or non-monotonic function of the leader’s equilibrium contribution. The non-monotonicity result is consistent with evidence in a recent field experiment (Jack and Recalde, J. Public Econ, 2015) but cannot be obtained in previous theoretical models of voluntary public goods games that were based on only signaling information (i.e., about the quality of the public good or the return to contributions to the public good). Surprisingly, I find that, for this result to hold, the follower’s distaste for non-conscientious leadership must be sufficiently low. I also find that the leader may not act conscientiously if he does not have an informational advantage to exploit.

Keywords: conscientious leadership, fairness, public good, signaling

JEL Classification: H000, H300, H500

Suggested Citation

Amegashie, J. Atsu, Public Goods, Signaling, and Norms of Conscientious Leadership (December 19, 2016). CESifo Working Paper Series No. 6247. Available at SSRN: https://ssrn.com/abstract=2906256

J. Atsu Amegashie (Contact Author)

University of Guelph - Department of Economics ( email )

50 Stone Road East
Guelph, Ontario N1G 2W1
Canada
519-824-4120 (Phone)
519-763-8497 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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