On the Effectiveness of Leading by Example in Public Goods Games

Jin-yeong Sohn, Dooseok Jang   Published :  August 2024   JEL Code: C9, D7, H4   URL to this Article: https://doi.org/10.1016/j.jebo.2024.05.021

Abstract

Despite the growing interest in leadership in the experimental literature, theoretical analyses of leadership have received relatively limited attention. This study investigates the effectiveness of leading by example in public goods games among reciprocal agents. The “leading-by-example” game (LBE) is a two-stage game with the same payoff structure as the classic voluntary contribution mechanism (VCM), in which a leader first makes a contribution decision, followed by the followers who make a contribution decision upon observing the leader’s move. If the marginal per capita return (MPCR) is sufficiently high, LBE is more effective than VCM at inducing contributions. However, if MPCR is low, VCM is more effective than LBE. An experimental test of the comparative statics is conducted.

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