Year: 2008
Type: preprint
Abstract: We merge the current approach to collective action failure based on free-riding (Olson, 1965) with the previous approach focusing on the distortions created by the need of leaders (Michels, 1911 and Max Weber, 1918). Group goals and incentives are set by leaders in view to maximize the probability of success —rather than the group expected payoff. In spite of not being group optimal, success maximizing leaders introduce incentives. Because there are incentives, leaders also distort the goals of the group away from the ideal provision of public good and devote excessive resources to private compensations. The distortion introduced on goals by leaders increase with group size. This creates an additional source of inefficiency in collective action. JEL-Classification: D70, D72, D74 Key-words: collective contests, leadership, group platform, incentives, sharing rules. Acknowledgements: We are grateful to Antonio Cabrales, Sjaak Hurkens and Debraj Ray for useful comments.
Authors: Joan Esteban, Esther Hauk
Institution: Consejo Superior de Investigaciones Científicas
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2143811173