Behavioral Mechanisms of Leadership

• Applicant: Professor Dr. Gerald Eisenkopf
• Subject Area: Economic Theory ; Accounting and Finance
• Term: from 2017 to 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 387785672

There is only limited clean insight into the effectiveness of leadership instruments like leading by example or punishment (Yaffe and Kark, 2011). This deficit is actually not that surprising because leaders typically only apply their most preferred instruments. Hence we do not know a leader's performance if she had used another instrument. This shortcoming limits the scope of evidence-based leadership training because we cannot assess the behavioral consequences of specific instruments. To address the identification problem, this project studies the relative effectiveness of leadership instruments (in particular leading by example and punishment) with a sequence of laboratory experiments, building upon and enhancing the recent developments in the behavioral economics of leadership. Experimental economists typically consider a first mover in a social dilemma as a leader. This leadership by example is an effective instrument to coordinate groups and enhance in-group cooperation, at least if group members have no alternative coordination mechanism at hand. This project will test the effectiveness of such leadership in a context where simple non-binding recommendations facilitate coordination. Moreover, it tests the effectiveness of leading-by-example relative to punishment. Such a test represents a streamlined comparison between transformational and transactional leadership (Judge and Robbins, 2015).The project studies this leadership impact in different environmental contexts (small vs. large groups, with/without additional free-form chat communication, competitive vs. neutral framings). It is well known that such environmental differences shape the inclination of group members to cooperate with each other. These differences can also influence the effectiveness of leadership instruments. For example, the threat of punishment can be more effective in large groups while competitive environments may enhance the impact of leading by example. Last, but not least, the project studies whether leaders actually choose the more effective instrument. Leading by example is a relative risky instrument because leaders are not sure whether the other group members will actually follow. With punishment, a leader has more control over her own payoff and the earning differences within the group. Hence, leaders might choose the safer rather than the more effective leadership instruments.

• DFG Programme: Research Grants