Research on leadership in economics has developed in parallel to the literature in management and psychology and links between the fields have been sparse. Whereas modern leadership scholars mostly focus on transformational and related leadership styles, economists have mainly emphasized the role of contracts, control rights, and incentives. We argue that both fields could profit from enriching their approach with insights from the other field. We review and synthesize the economics literature on leadership in organizations and discuss how leadership scholars in management and psychology can benefit from the detailed understanding of transactional methods that economists have developed. We link the contributions in economics to a broad set of topics including the foundations of leadership, leader emergence, and leader effectiveness. At the same time, we also point out limitations of the economic approach and outline how the integration of leadership research and economics would broaden the scope of future studies.
There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral economics—for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences—in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship.
This paper develops an experimental approach to measure competition among intermediaries in agricultural markets, based on the random allocation of subsidies to traders. We show that, in individual-level randomizations with competitive spillovers, treatment-control differences in prices can inform an intuitive test of the degree of differentiation among firms. In the context of the Sierra Leone cocoa industry, traders compete by providing farmers credit, as well as through prices. Even when accounting for both the price and the credit margin, differentiation among traders is low. By combining the experimental results with quasi-experimental estimates of the pass-through rate, we then estimate market size the effective number of traders competing for farmers' supply and we find it to be substantially larger than the village. These results are consistent with a view of competitive agricultural markets.
Counterproductive reactions to unfavorable trading prices can cause inefficiencies in economic exchange. This paper studies whether the use of a competitive pricing mechanism reduces such wasteful activities. We report data from a laboratory experiment where a powerful buyer can trade with one of two sellers—an environment that can lead to very low prices for the sellers. We find that low procurement prices trigger significantly less punishment by sellers if the buyer uses a competitive auction rather than his price-setting power to dictate the same terms of trade directly. Our data suggest that the use of competitive pricing mechanisms can mitigate inefficient reactions to unequal distributions of trade surplus.
Neue Methoden zeigen Spendern, wofür sich das Geldgeben wirklich lohnt. Ein Gastbeitrag von Johannes Haushofer, Dina Pomeranz, Max Roser und Frank Schilbach
Der technische Fortschritt vernichtet Arbeitsplätze und schafft neue. Über die Entwicklung der Arbeitswelt sprachen Roger Nickl und Thomas Gull mit der Historikerin Brigitta Bernet und dem Ökonomen David Dorn.
Main objectives: Executive functions are frequently a weakness in children born preterm. We examined associations of executive functions and general cognitive abilities with brain structure in preterm born adolescents who were born with appropriate weight for gestational age and who have no radiological signs of preterm brain injury on neuroimaging.
Methods: The Stockholm Neonatal Project (SNP) is a longitudinal, population-based study of children born preterm (<36 weeks of gestation) with very low birth weight (<1501g) between 1988–1993. At age 18 years (mean 18 years, SD 2 weeks) 134 preterm born and 94 full term participants underwent psychological assessment (general intelligence, executive function measures). Of these, 71 preterm and 63 full term participants underwent Magnetic Resonance Imaging (MRI) at mean 15.2 years (range 12–18 years), including 3D T1-weighted images for volumetric analyses and Diffusion Tensor Imaging (DTI) for assessment of white matter microstructure. Group comparisons of regional grey and white matter volumes and fractional anisotropy (FA, as a measure of white matter microstructure) and, within each group, correlation analyses of cognitive measures with MRI metrics were carried out.
Results: Significant differences in grey and white matter regional volumes and widespread differences in FA were seen
between the two groups. No significant correlations were found between cognitive measures and brain volumes in any group after correction for multiple comparisons. However, there were significant correlations between FA in projection fibres and long association fibres, linking frontal, temporal, parietal, and occipital lobes, and measures of executive function and general cognitive abilities in the preterm born adolescents, but not in the term born adolescents.
Overall significance of the study: In persons born preterm, in the absence of perinatal brain injury on visual inspection of MRI, widespread alterations in regional brain tissue volumes and microstructure are present in adolescence/young adulthood. Importantly, these alterations in WM tracts are correlated with measures of executive function and general cognitive abilities. Our findings suggest that disturbance of neural pathways, rather than changes in regional brain volumes, are involved in the impaired cognitive functions.
This paper studies incentives for the interim voluntary disclosure of verifiable information in probabilistic all-pay contests. Considered are unfair contests, i.e., contests in which, subject to activity conditions, one player (the favorite) is interim always more likely to win than the other player (the underdog). A condition is identified that ensures that a given contest is unfair regardless of disclosure decisions. Under this condition, full revelation is the unique perfect Bayesian equilibrium outcome of the contest with pre-play communication. This is so because the weakest type of the underdog will try to moderate the favorite, while the strongest type of the favorite will try to discourage the underdog - so that the contest unravels. We also show that self-disclosure may, with positive probability, provoke unintended reactions, i.e., "dominant" or "defiant" behavior. Moreover, while individually rational for the marginal type, the unraveling may be strictly Pareto inferior from an ex-ante perspective. Our main conclusion is just the opposite of the corresponding finding for the deterministic all-pay auction. The proofs employ lattice-theoretic methods and an improved version of Jensen's inequality.
