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...

This paper suggests that even if it is costless to inform all team members about the quality of a project, there are reasons to concentrate information in the hands of one person (a leader) and prevent full revelation to the rest. This deprives others of the information necessary for profitable...

We consider a leader–follower mechanism in a collective action game, which exhibits both free riding and coordination problems. Leaders can persuade group cooperation by making a costly commitment to a project. Followers can choose to follow their leaders. The project's return can be...

Rational players, unconstrained by contracts or formal authority, choose to follow a better-informed leader, whose action reveals part of her information. If the leader satisfies a credibility condition, then the unique nondegenerate equilibrium solves distinct shirking and coordination problems...

Our experimental results suggest that the effectiveness of leading by example decreases with group size. The discrepancy between the leaders' and followers' incentives increases with group size. Thus, as group size increases, followers more often refuse to follow their leaders.