let’s (not) escalate this! intergroup leadership in a team ...€¦ · et al., 2009; potters et...

ConceptsSetup

Equilibrium Strategies / HypothesesResults

Let’s (not) escalate this!Intergroup leadership in a team contest

Florian Heine 1 Arno Riedl 2

1Tilburg School of GovernanceTilburg School of Economics and Management

Tilburg University

2Department of EconomicsSchool of Business and Economics

Maastricht University

February 2017

Heine & Riedl Let’s (not) escalate this!

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ConceptsSetup

Introduction

I Research on leadership repeatedly finds an efficiencyenhancing effect of a leader in public goods games or groupproduction both in the lab and in the field (Kosfeld andRustagi, 2015; Arbak and Villeval, 2013; van der Heijdenet al., 2009; Potters et al., 2007)

I Large class of situations where groups are not isolated, but insome form of competition (cf. Dawes, 1980)

I In order to outperform competitors, considerable resources arespent without direct productive value

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ConceptsSetup

Introduction

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ConceptsSetup

Introduction

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ConceptsSetup

Welfare enhancing effect of leaders: Public Good

Average team effort levels and earnings (van der Heijden, Potters, and Sefton,2009)

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ConceptsSetup

Welfare enhancing effect of leaders

I In a team contest, things might very well look differentI ingroup / outgroup leadership trade-off, where strong

leadership comes to the detriment of outgroup relations(Pittinsky and Simon, 2007)

I Intergroup leadership: Encouraging contact between grouprepresentatives (Allport, 1954)

⇒ Can a leader curtail over-contribution and improve groupwelfare in a team competition for a public good?

⇒ Can intergroup leadership reduce between-group conflict andincrease social welfare?

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ConceptsSetup

Welfare enhancing effect of leaders

I In a team contest, things might very well look differentI ingroup / outgroup leadership trade-off, where strong

leadership comes to the detriment of outgroup relations(Pittinsky and Simon, 2007)

I Intergroup leadership: Encouraging contact between grouprepresentatives (Allport, 1954)

⇒ Can a leader curtail over-contribution and improve groupwelfare in a team competition for a public good?

⇒ Can intergroup leadership reduce between-group conflict andincrease social welfare?

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ConceptsSetup

Concepts

Contest game

I Two groups compete against each other

I One group gets the prize, the other one nothing

I Winning probability depends on tokens invested

Leadership

Leading-by-example One player moves before the others, setting abenchmark. No formal authority.

Transactional leadership Leader is in direct exchange relationshipwith other players. Leader in a hierarchicallysuperordinate position.

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ConceptsSetup

Concepts

Contest game

Leadership

ConceptsSetup

Concepts

Contest game

Leadership

ConceptsSetup

Setup – Baseline

I 15 periods in partnermatching

I Endowment E = 120tokens per period

I Individual prizez = 480 tokens forplayers in the winninggroup

I Individuals get toknow how much othergroup matescontribute

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

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ConceptsSetup

Setup – Treatments

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Baseline

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Ingroup leading-by-example

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

Intergroup leading-by-example

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Ingroup transactional leader

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

Intergroup transactional leaderHeine & Riedl Let’s (not) escalate this!

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ConceptsSetup

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Baseline

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

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ConceptsSetup

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Baseline

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

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ConceptsSetup

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Baseline

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

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ConceptsSetup

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Baseline

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

1

2

3

4

1

2

3

4

∑k∈K

vk∑k∈K

vk+∑

m∈Mvm

Win

Leaders communicate

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ConceptsSetup

Equilibrium Strategies

I Individual expected payoff πi(vi) = E +

vi+∑k 6=ik∈K

vK

vi+∑k 6=ik∈K

vK+∑

m∈MvM· z − vi

Equilibrium predictions

Leader Followers total Followers each if symmetric

Baseline 30 90 30Ingroup leading-by-example 0 120 40Ingrouptransactional leader 120 0 0Intergroup leading-by-example 0 120 40Intergrouptransactional leader 120 0 0

Nash equilibrium under risk neutrality.

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ConceptsSetup

Equilibrium Strategies

I Individual expected payoff πi(vi) = E +

vi+∑k 6=ik∈K

vK

vi+∑k 6=ik∈K

vK+∑

m∈MvM· z − vi

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ConceptsSetup

Four stylised facts

First Interior solution (cf. public goods games)

Second Overall welfare maximising strategy is for nobody tocontribute and let chance decide

Third Under risk neutrality, equilibrium contribution staysthe same per contest party for every treatment

Fourth Either leader contributes zero, the followers fully shipin, or leader only contributor

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ConceptsSetup

Four stylised facts

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ConceptsSetup

Four stylised facts

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ConceptsSetup

Four stylised facts

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ConceptsSetup

Alternative Hypotheses

I Leadership behaviour as benchmark for followersI Leader’s contribution as signal or sacrifice (Hermalin, 1998;

Potters et al., 2001; Meidinger and Villeval, 2002)I Transactional leader followed out of self-interest (De Cremer

and Van Vugt, 2002)

I Normative rules (Reuben and Riedl, 2013)I High level of efficiency for own groupI Maximising sum of payoffs of all players across groups

I Social preferences

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ConceptsSetup

and Van Vugt, 2002)

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ConceptsSetup

and Van Vugt, 2002)

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ConceptsSetup

Procedures

I Recruited 360 participants using ORSEE (Greiner, 2004)(9 pairs of groups per treatment)

I Experiment programmed in z-Tree (Fischbacher, 2007) andconducted at BEElab, Maastricht NL

I Each session took about 80 minutes, including reading theinstructions, a trial period, a questionnaire and payment

I Average earnings e 11.75 (About $12.80 or £8.90 at the timeof the experiment)

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ConceptsSetup

Contribution to the contest

100

200

300

400

Ave

rage

gro

up c

ontr

ibut

ion

Baseline Ingroup lbe Ingroup trans Intergroup lbe Intergroup trans

I Without between groupcommunication, leadersprompt an increase incontest expenditures.

I Allowing forcommunication betweengroup leaders cushionsthis effect and results ina contest expenditurelevel which is comparableto the baseline.

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ConceptsSetup

Contribution over the Periods

4060

8010

0In

divi

dual

Con

tribu

tion

1 5 10 15Period

Leading by Example (lbe)

4060

8010

0

1 5 10 15Period

Transactional Leader

Ingroup (no communication) Intergroup (Leaders chat)Baseline Symmetric NE

Generally:

I Negative trend for lbetreatments

I Positive trend fortransactional treatments

I no trend for Baselinetreatment

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ConceptsSetup

First Round Contribution

020

4060

80F

irst m

ove

Lead

er a

nd F

ollo

wer

Baseline Ingroup lbe Ingroup trans Intergroup lbeIntergroup trans

Leader Follower

I Very small treatmentdifference on impact

I Only Intergroup lbetreatment significantlylower

I Leaders have noescalating effect on thegroup contest in round 1

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ConceptsSetup

Scatterplot

020

4060

8010

012

0

0 20 40 60 80 100 120Leader Contribution

R-squared: 0.514

Leading by Example

020

4060

8010

012

0

R-squared: 0.364

Ingroup

020

4060

8010

012

0

R-squared: 0.372

Leading by Example

020

4060

8010

012

0

R-squared: 0.531

Intergroup (with communication)

Fol

low

er C

ontr

ibut

ion

I A higher contribution bythe leader is paralleled bymore followercontributions across alltreatments

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ConceptsSetup

Transactional Treatments – Sunflower Plot

0

200

400480

600

800

1000

Priz

e R

ecei

ved

from

Lea

der

-100 -50 0 50 100Contribution Relative to Leader

Reallocation 1 petal = 1 obs.1 petal = 23 obs.

Two fields of attrition:

I Contribute as Leaderdoes

I Reallocate 480

Also:

I North-western domainnearly empty

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ConceptsSetup

Transactional Treatments – Sunflower Plot 2

-100

-50

0

50

100

Con

tribu

tion

Rel

ativ

e to

Lea

der

0 200 400 480 600 800 1000Prize Received from Leader previous period

single obs. 1 petal = 1 obs.1 petal = 20 obs.

Similar pattern:

I Contribute as Leaderdoes

I Reallocate 480

Now:

I South-eastern domainnearly empty

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ConceptsSetup

The chat contents

Leader Contribution asFunction of Chat Contents:

I Leaders’ chat contentshave predictive power

I i.e. Leaders coordinatingon contributing low(high) end up buying less(more) Lottery tickets

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ConceptsSetup

The chat contents

010

020

030

0

Low contribution

Medium

contribution

High contribution

Alternate

Bonding

Small talk

Understanding

Efficiency

Followers' behaviour

Give much to followers

Give little to followers

Other

Intergroup lbe Intergroup trans

I More mitigatingmessages sent inIntergroup lbe treatment(and vice versa)

I This contributes atexplaining the strongtreatment differences

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ConceptsSetup

Conclusion

I This study provides the first (experimental) investigation onthe role of leaders in a team contest

I Our results substantiate a considerably pessimist view overallI Most leadership types prompt an escalation of the contestI Leaders tend to incentivise their teammates to ship in

resources to the competition

I Intergroup leadership (via free form text communication)between leaders of competing groups can contribute atabating the rat race

I significant improvement with respect to the baseline levelI Leaders who manage to coordinate through the chat on taking

turns at shipping in resources are most successful in guidingtheir groups towards more efficient play

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ConceptsSetup

Conclusion

I This study provides the first (experimental) investigation onthe role of leaders in a team contest

I Our results substantiate a considerably pessimist view overallI Most leadership types prompt an escalation of the contestI Leaders tend to incentivise their teammates to ship in

resources to the competition

I Intergroup leadership (via free form text communication)between leaders of competing groups can contribute atabating the rat race

I significant improvement with respect to the baseline levelI Leaders who manage to coordinate through the chat on taking

turns at shipping in resources are most successful in guidingtheir groups towards more efficient play

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References

Literature

G. W. Allport. The Nature of Prejudice. Addison-Wesley, Reading,MA, 1954.

E. Arbak and M.-C. Villeval. Voluntary leadership: motivation andinfluence. Social Choice and Welfare, 40(3):635–662, 2013.ISSN 0176-1714. doi: 10.1007/s00355-011-0626-2. URLhttp://dx.doi.org/10.1007/s00355-011-0626-2.

R. M. Dawes. Social dilemmas. Annual Review of Psychology, 31(1):169–193, 1980. doi: 10.1146/annurev.ps.31.020180.001125.URL http://www.annualreviews.org/doi/abs/10.1146/

annurev.ps.31.020180.001125.

http://dx.doi.org/10.1007/s00355-011-0626-2

http://www.annualreviews.org/doi/abs/10.1146/annurev.ps.31.020180.001125

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Literature (cont.)

D. De Cremer and M. Van Vugt. Intergroup and intragroupaspects of leadership in social dilemmas: A relational model ofcooperation. Journal of Experimental Social Psychology, 38(2):126 – 136, 2002. ISSN 0022-1031. doi:10.1006/jesp.2001.1499. URL http://www.sciencedirect.

com/science/article/pii/S0022103101914994.

U. Fischbacher. z-tree: Zurich toolbox for ready-made economicexperiments. Experimental Economics, 10(2):171–178, 2007.

B. Greiner. The online recruitment system orsee 2.0. A guide forthe organization of experiments in economics. University ofCologne, 2004.

http://www.sciencedirect.com/science/article/pii/S0022103101914994

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B. E. Hermalin. Toward an economic theory of leadership: Leadingby example. The American Economic Review, 88(5):pp.1188–1206, 1998. ISSN 00028282. URLhttp://www.jstor.org/stable/116866.

M. Kosfeld and D. Rustagi. Leader punishment and cooperation ingroups: Experimental field evidence from commons managementin ethiopia. American Economic Review, 105(2):747–83,February 2015. doi: 10.1257/aer.20120700. URL http:

//www.aeaweb.org/articles?id=10.1257/aer.20120700.

C. Meidinger and M.-C. Villeval. Leadership in Teams: Signaling orReciprocating ?, Dec. 2002. URLhttp://halshs.archives-ouvertes.fr/halshs-00178474.Working Paper du GATE 2002-13.

http://www.jstor.org/stable/116866

http://www.aeaweb.org/articles?id=10.1257/aer.20120700

http://halshs.archives-ouvertes.fr/halshs-00178474

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T. L. Pittinsky and S. Simon. Intergroup leadership. TheLeadership Quarterly, 18(6):586 – 605, 2007. ISSN 1048-9843.doi: http://dx.doi.org/10.1016/j.leaqua.2007.09.005. URLhttp://www.sciencedirect.com/science/article/pii/

S104898430700121X. The Leadership Quarterly Yearly Reviewof Leadership.

J. Potters, M. Sefton, and L. Vesterlund. Why announceleadership contributions?: An experimental study of thesignaling and reciprocity hypotheses. Tilburg University, 2001.

J. Potters, M. Sefton, and L. Vesterlund. Leading-by-example andsignaling in voluntary contribution games: an experimentalstudy. Economic Theory, 33(1):pp. 169–182, 2007. ISSN09382259. URL http://www.jstor.org/stable/27822588.

http://www.sciencedirect.com/science/article/pii/S104898430700121X

http://www.jstor.org/stable/27822588

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E. Reuben and A. Riedl. Enforcement of contribution norms inpublic good games with heterogeneous populations. Games andEconomic Behavior, 77(1):122 – 137, 2013. ISSN 0899-8256.doi: http://dx.doi.org/10.1016/j.geb.2012.10.001. URLhttp://www.sciencedirect.com/science/article/pii/

S0899825612001492.

E. van der Heijden, J. Potters, and M. Sefton. Hierarchy andopportunism in teams. Journal of Economic Behavior &Organization, 69(1):39 – 50, 2009. ISSN 0167-2681. doi:10.1016/j.jebo.2008.09.007. URLhttp://www.sciencedirect.com/science/article/pii/

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