1. LECTURE 8
LEADERSHIP,
STATUS,
OBEDIENCE,
RESPONSIBILITY
& OTHER LOOSE ENDS
309ECN Dr. Alexandros Karakostas

2. Intended Learning Outcomes
 Examine how status may affect the economic behaviour
 of an individual
 of those around him
 How the behaviour of leaders may affect employees
behaviour
 How other factors commonly ignored in economics may
affect economic behaviour within organisations
 responsibility towards others
 Singling out / Ostracism
 Show that sometimes is sufficient to have sufficient
authority. Incentives don´t matter!

3. The Effect of Status on Charitable
Giving (Kumur and Vesterlund, 2010)
 Fundraisers often start their campaigns by soliciting
the wealthier, more recognized and respected
individuals in a community.
 Purpose of the study is to examine whether the
success of this solicitation ordering in part can be
attributed to the fact that it enables individuals to
select organizations that have a high-status donor
base

4. Experimental Design
 Two stages
 Stage 1: Participant where divided into low-status &
high-status depending on how well they did on a
general knowledge quiz.
 Stage 2: 2-player Voluntary contribution game.
 Two options: A & B
 Option A: participant receives $1
 Option B: Both participants receives £0.75
 In treatment 1 the high status player plays first
 In treatment 2 the low status player plays first

5. Results

6.  If a leader contributes he increases the probability
that a follower contributes by 39 percent in the
Star-First treatment and by 25 percent in the Star-
Second treatment.
 Do the leaders and followers anticipate this?
 YES!!

9.  However who earns more?

10. Cooperation and status in
organizations (Eckel et al. 2010)
 Social status plays a complex role in human interaction
 Purpose of the study is to study whether social status serves
as a useful mechanism for solving public goods problems.
 Status can act as a coordinating device with higher-status
individuals more likely to be mimicked.
 Or in a setting with costly punishment, social status may
enhance the effectiveness of punishment and reduce
antisocial punishment, enhancing overall efficiency.

11. A network!
 4-Player Public good game using a star network!
 Note that Player 1 observes everyone and everyone
observes only player 1!

12.  The experiment follows a 2x2 design.
 That is High, Low status and With and Without Punishment
 Status was determined by a quiz- in high status the
student with the highest score was assigned as the central
player (and vece versa)
 In treatments with Punishment Player 1 can punish
everyone and every other player can only punish Player
1.

14. Average Punishment

15. Cooperation and status in
organizations (Eckel et al. 2010)
 Status matters.
 The decisions of a central, commonly observed
player affect the decisions of peripheral players:
central players serve a leadership role.
 peripheral players are more likely to mimic the
behavior of high-status central players
 High-status central players punish more and are
punished less.

16. The Social Costs of Responsibility
(Humphrey and Renner, 2011)
 Would the choices you make be affected by whether or
not you have responsibility for the welfare of others?
 Would you continue to smoke whilst pregnant or drive your
car at the same speed when your children are passengers?
 As a parent would you donate more or less of your money
to charity, more or less of your time to volunteering?
 Household decisions are often taken by the head of the
household but affect all family members.
 Managers frequently take decisions as representatives of
firms that affect themselves as well as other employees.

17. The Social Costs of Responsibility
(Humphrey and Renner, 2011)
3 Treatments
 Baseline: A standard 4-player Public Good Game
 Strangers treatment: Each player is responsible for the
earnings of a stranger. Whatever the player makes
the same amount is paid to the stranger.
 Friends treatment: Each player is responsible for the
earnings of a stranger. Whatever the player makes
the same amount is paid to the stranger.

18. The Social Costs of Responsibility
(Humphrey and Renner, 2011)

19. The Social Costs of Responsibility
(Humphrey and Renner, 2011)
Results
 Contributions in the Friends treatment were lower than
in the baseline (Mann-Whitney, p=0.087)
 Contributions in the Strangers treatment were not
statistically significant different from the baseline
(Mann-Whitney, p=0.67)
 Contributions in the Friends treatment were lower than
in the Strangers (Mann-Whitney, p=0.037)
 Social ties are essential for responsibility to affect
behaviour!

20. Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)
 Galeotti and Zizzo where interested on what happen
if you artificially single out an individual out of a
group.
 How would this affect the behaviour of the singled out
individual but also of those who have to liase with him.
 Singling out can have negative connotations (i.e black
sheep) or positive (gold sheep).

21. Prof. Daniel Zizzo
(Inspiring supervisor!)
Fabio Galeotti
(Best friend!)

22. Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)
 Initial questionnaire
 Gender;
 Age;
 University status;
 Country;
 Field of studies (Economics/not Economics related);
 Relationship status;
 Smoker;
 Facebook user.
 Instructions for first task (trust game)
 Ranking Phase

23. Baseline Treatment
TRUST GAME (Berg et al., 1995)
truster trustee
48
point
s
48 –
T
3
3T48 – T + Y 3T – Y

24. The BS treatment
*
Who is the least preferred match?
1/31/2017

25. The GS treatment
Who is the most preferred match?
*

26. The RS treatment
*
The computer will now randomly select a
participant from the experiment

27. The PIBS and PIGS treatments
Who is the least/most preferred match?

28. The ABS treatment
Who is the least preferred match?
*

29. Giving rate
to singled
out subjects
Giving rate
to non-
singled out
subjects
• Result 1: non-singled out subjects gave less on average to
singled out than non-singled out subjects (Wilcoxon p = 0.011),
a result driven by RS (Wilcoxon p = 0.036).
0.1.2.3.4.5
B BS GS RS PIBS PIGS ABS
Figure 1: Giving rates
Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)

30. Return rate
to singled
out subjects
Return rate
to non-
singled out
subjects
• Result 2: when subjects not responsible of the distinct
status of the singled out individual, less trustworthy towards
him or her (Wilcoxon p = 0.038); when responsible, no
difference (Wilcoxon p > 0.1).
0.05.1.15.2.25
B BS GS RS PIBS PIGS ABS
Figure 2: Return rates
Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)

31. • Result 3: in aggregate, singled out subjects trust others less
than non-singled out subjects (Wilcoxon p = 0.040).
Giving rate
from singled
out subjects
Giving rate
from non-
singled out
subjectsGiving rate
from
authorities
0.1.2.3.4.5
B BS GS RS PIBS PIGS ABS
Figure 3: Giving rates
Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)

32. Return rate
from singled
out subjects
Return rate
from non-
singled out
subjectsReturn rate
from
authorities
• Result 5: Authorities return less than non-singled out
subjects (Wilcoxon p = 0.030) and baseline subjects (Mann-
Whitney p = 0.045);
• Result 4: Least preferred singled out subjects return
less than non-singled out subjects (Wilcoxon p = 0.003)
and baseline subjects (Mann-Whitney p = 0.004);
0.05.1.15.2.25
B BS GS RS PIBS PIGS ABS
Figure 4: Return rates
Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)

33. 1/31/2017
• Result 6: Most preferred singled out subjects behave bimodally,
with either high or low return rates (Siegel-Tukey p = 0.007).
02468
Density
0 .5 1
Baseline
02468
Density
0 .5 1
BS
02468
Density
0 .5 1
RS
02468
Density
0 .5 1
PIBS
02468
Density
0 .5 1
ABS
Trust and Trustworthiness with Singleton
Groups (Galeotti and Zizzo, 2012)

34. Endogenous Leadership: Selection and
Influence (Arbak & Villeval, 2008)
 Arbak and Villeval (2007) were interested in voluntary
leadership.
 Leading a team is hard work!
 If leading is costly, why are some people willing to do it?
 What influences the decision to lead and what effect do
the leader’s choice has on the ‘followers’?

35. Endogenous Leadership: Selection and
Influence (Arbak & Villeval, 2008)
Experimental Design
 Two stage Public good game
 Participants can choose between contributing in the first stage (as
leaders) or in the second stage (as followers)
 The key difference is that if you contribute in the second stage you
are informed of how much the leader has contributed.
 When there are more than one volunteers to lead one is selected
at random.
 However, all volunteers are asked how much they would have
contributed as leaders (you can then compare how they would behave as
followers or leaders!)
 In the end of the experiment subjects also completed a personality
test

36. Endogenous Leadership: Selection and
Influence (Arbak & Villeval, 2008)
Experimental Design
 3 Treatments
 Benchmark – participants can choose in which stage they
want to participate (as explained in previous slide)
 Attribute – Benchamark + subjects are also informed
about gender a measure of social orientation
 A yellow circle next to the name of above average
contributions to a charity from their initial endowment
 Control –1 subject is randomly allocated to the first stage.

37. Endogenous Leadership: Selection and
Influence (Arbak & Villeval, 2008)

38. Endogenous Leadership: Selection and
Influence (Arbak & Villeval, 2008)
Key Results
 A quarter of subjects are wiling to lead despite it usually
entails of earning 25% less than followers!
 Leaders contributions decrease over time slower than the
contributions of followers! – The leaders influence
potentially vanishes!
 Eliminated leaders contribute more than three times more
than self-selected followers

39. Who makes a good leader? Social preferences
and leading-by-example (Gachter et al., 2008)
 Examine the effects of social preferences and beliefs
about the social preferences of others in a 2-player
leader-follower voluntary contributions game.
 Both players allocated 5 tokens
 For each token contributed to the joint account each
player receives £1. Each token kept yields a £1 return to
the player.
 Game is sequential.
 Subjects had to also complete a Prediction task, and
a Machiavellian instrument/questionnaire

40. S= selfish WR=Weak Reciprocators SR= Strong Reciprocators

43.  After controlling for
beliefs (Degree of
optimisim) SR and WR
still is statistically
significant.
 Reciprocators still
contribute more even
after controlling for
beliefs!

44. The dos and don’ts of leadership in sequential
public goods experiments (Rivas & Sutter, 2008)
Experimental Design
 6 Treatments
 Control – A standard 4 player PGG
 Reward – A leader is randomly allocated; leader
contributes first; then rewards one member with a 10ECU
bonus to at the cost of 2ECU to everyone else.
 Exclusion – As Reward but instead of rewards the leader
can exclude one member of the group.
 Endogenous – Subjects can become leaders by being the
first who contribute in the PGG
 Exogenous – A further control
 Last – AS Reward and Exclusion but leader contributes last

45. The do’s and don’ts of leadership in sequential
public goods experiments (Rivas & Sutter, 2008)

46. The dos and don’ts of leadership in sequential
public goods experiments (Rivas & Sutter, 2008)

47. The dos and don’ts of leadership in sequential
public goods experiments (Rivas & Sutter, 2008)

48. Obedience (Karakostas and Zizzo, 2012)
 Organizational settings
 Tough choices
 Possibly unpleasant
 Just following orders
The Manager

49. Experimental Design: Replication
 Joy of destruction mini-game (AH, 2011, paper and
pencil)
 Open:
o 2 players with10 guilders each
o Both decide simultaneously whether or not to destroy 5
guilders at a cost of 1 guilder

50. Obedience (Karakostas and Zizzo, 2012)
“most organizations would cease to operate efficiently if
deference to authority were not one of the prevailing
norms.” (Cialdini and Goldstein, 2004:596)
 How much are people willing to destroy if told to do so?
o Does there have to be a reason?
o Does aggression depend on expectation of aggression of
others?
 How far can demand effects ‘go’?

51. Experimental Design
Justified1 sided
Constant
10 times
Peaked
Pressure

52. Experimental Results
7.5%
15.0% 17.5%
58.9%
70.7%
60.0%
42.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
O H R RO ROJ RO1 ROC
AverageDestructionRate
Treatment
 Qualitative picture of O
and H as in AH (2011)
 R does not induce greater
destruction than in H
 No statistically significant
difference among O, H
and R

53. Experimental Results
7.5%
15.0% 17.5%
58.9%
70.7%
60.0%
42.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
O H R RO ROJ RO1 ROC
AverageDestructionRate
Treatment
 However, about 60% of
subjects do what they
are told
 Higher than in R
(p < 0.01)
 No reason provided
 even if it means to
destroy 50% of the
partner’s endowment

54. Experimental Results
7.5%
15.0% 17.5%
58.9%
70.7%
60.0%
42.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
O H R RO ROJ RO1 ROC
AverageDestructionRate
Treatment
 Does providing a
justification make
a difference?
 Not statistically
significantly so

55. Experimental Results
7.5%
15.0% 17.5%
58.9%
70.7%
60.0%
42.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
O H R RO ROJ RO1 ROC
AverageDestructionRate
Treatment
 Do subjects
retaliate out
of fear of
obedience
of others?
 No

56. 7.5%
15.0%
17.5%
58.9%
70.7%
60.0%
42.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
O H R RO ROJ RO1 ROC
AverageDestructionRate
Treatment
 Does having peak pressure points raise obedience?
 Possibly yes (p = 0.06)
 ...though still more destruction than in R (p = 0.04)

57.  Kumru, Cagri S., and Lise Vesterlund. "The effect of status on
charitable giving." Journal of Public Economic Theory 12.4 (2010):
709-735.
 Eckel, Catherine C., Enrique Fatas, and Rick Wilson. "Cooperation
and status in organizations." Journal of Public Economic
Theory 12.4 (2010): 737-762.
 Arbak, Emrah, and Marie-Claire Villeval. Endogenous leadership:
selection and influence. No. 2732. IZA Discussion Papers, 2007.
 Gürerk, Özgür, Bernd Irlenbusch, and Bettina Rockenbach.
"Motivating teammates: The leader’s choice between positive and
negative incentives."Journal of Economic Psychology 30.4 (2009):
591-607.
Expected reading

58. Expected reading
 Humphrey, Steven J., and Elke Renner. The social costs of
responsibility. No. 2011-02. CeDEx discussion paper series, 2011.
 Karakostas and Zizzo (2013) “Obedience” Working paper
available at:
http://164.15.27.46/ecaresdocuments/seminars1213/zizzo.pdf
 Galeotti, Fabio, and Daniel John Zizzo. "Trust and trustworthiness
with singleton groups." University of East Anglia Centre for
Behavioural and Experimental Social Science Working Paper (2012):
12-03.
 Eckel, Catherine C., Enrique Fatas, and Rick Wilson. "Cooperation
and status in organizations." Journal of Public Economic Theory 12.4
(2010): 737-762.

59. Expected reading
 Rivas, Maria Fernanda, and Matthias Sutter. The dos and don'ts of
leadership in sequential public goods experiments. No. 2008-25.
Working Papers in Economics and Statistics, 2008.
 Hong, Kessely, and Iris Bohnet. "Status and distrust: The relevance
of inequality and betrayal aversion." Journal of Economic
Psychology 28.2 (2007): 197-213.
 Andreoni, James, and Justin M. Rao. "The power of asking: How
communication affects selfishness, empathy, and altruism." Journal
of Public Economics 95.7 (2011): 513-520.