American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Leadership and Information
American Economic Review
vol. 97,
no. 3, June 2007
(pp. 944–947)
Abstract
An organization makes collective decisions through neither markets nor contracts. Instead, rational agents voluntarily choose to follow a leader. In many cases, incentive problems are solved: the unique nondegenerate equilibrium achieves the first best, even though every agent has incentives to free ride. The leader has no special talents but is distinguished by getting exclusive access to information. A crucial feature is that the leader reveals part but not all of her information. It is this maintenance of informational asymmetry that permits achieving the first best. (JEL D23, M54)Citation
Komai, Mana, Mark Stegeman, and Benjamin E. Hermalin. 2007. "Leadership and Information." American Economic Review, 97 (3): 944–947. DOI: 10.1257/aer.97.3.944JEL Classification
- D23 Organizational Behavior; Transaction Costs; Property Rights
- M54 Personnel Economics: Labor Management