Type of Document Dissertation Author Komai, Mana Author's Email Address email@example.com URN etd-06162004-123403 Title An Economic Theory of Leadership Degree PhD Department Economics Advisory Committee
Advisor Name Title Eckel, Catherine C. Committee Chair Lutz, Nancy A. Committee Member Keywords
Date of Defense 2004-05-25 Availability unrestricted AbstractThis dissertation develops an economic theory of leadership based on assignment of information.
Common theories assume that organizations exist to reduce transaction costs by replacing
imperfect markets with incomplete long term contracts that give managers the power to command
subordinates. This view reverses all of these premises: I study an organization in which
it is costless to transmit and process information, contracts exist in the backgound if at all,
and agents are not bound to the organization. The organization is held together by economies
of scale in generating information and by the advantages of controlling access to that information.
The minimalist model of organizations produces a minimalist theory of leadership:
leaders have no special talent but are leaders simply because they are given exclusive access to
certain information. A single leader induces a first best outcome if his incentives are aligned
with his subordinates. If a single leader is not credible, then diluting the power of leadership
by appointing multiple informed leaders can ensure credibility and improve e.ciency but can
not produce the first best. If agents are di.erentiated by their costs of cooperation the most
cooperative player is not necessarily the best leader. In this scenario, the ability of the group
to sustain fully cooperative outcomes may depend on the player with the least propensity to
cooperate. Therefore, to maximize e.ciency (i.e., to maximize the range of circumstances in
which e.cient cooperation is sustainable), the group should sometimes promote less cooperative
people. Here, ”less cooperative” means lazy or busy rather than disagreeable. This dissertation
also applies the idea of leadership (endorsement) to voluntary provision of public goods.
I show that when the leader is unable to fully reveal his information expected contributions,
ex-ante, are unambigeously higher in the leader-follower setting. That is partial revelation of
information induces more contribution compared to full revelation or complete information. I
also show that if the utility functions are linear then ex-ante welfare is unambigeously higher
in the presence of an informed endorser.
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