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John Hamman April 14, 2014 (12-1:15 PM)

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 

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:

Apr 9, 2014, 1:43 PM