FACULTY: Sign up to meet with John during his visit to campus on Monday, 4/14! To do so, please contact Jennifer Williams in the Dept of Political Science at jwilliams6@wisc.edu Managing Social Credibility: An Experiment on Coordination and Leadership David J. Cooper Department of Economics Florida State University John R. Hamman Department of Economics Florida State University Roberto A. Weber Department of Economics University of Zurich Abstract We study a situation in which independent agents face uncertainty about the return from costly and complementary investments to a joint venture. Our specific focus is on the role of a leader with private information, but whose interests are not always aligned with followers, in facilitating successful coordination through cheap-talk recommendation. We study the extent to which leaders in such situations possess “social credibility,” or the ability to coordinate followers’ behaviors with their statements. In an experiment, we find that leaders manage social credibility by forgoing potentially profitable requests for investment in order to make it more likely that subsequent recommendations to invest are followed. We identify factors that affect the persistence of social credibility. Below are a few pictures from the seminar:    |
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