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Abstract:
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"Why are there leaders? All around us, there are leaders. The boss at work and the football coach, political leaders and religious leaders, leaders of multinational corporations and of rural villages in developing countries, leaders of formal organisations and of informal associations. Why this abundance of leaders in every aspect of life? What is the economic rationale for having leaders? How can we use economic theory to explain who becomes the leader?
"In situations where ownership to crucial resources provides power and authority to certain individuals, the answers to both questions become trivial. However, when we turn to informal cooperation between individuals who are co-owners or co-users of for example a common-pool resource, it is more difficult to find a satisfying answer.
"Cooperation between co-users of such resources is often motivated using non-cooperative game theory and described using institutional approaches. However, the role of leadership is given little room in the literature, despite empirical evidence of its importance. When the co-users' can improve the outcome by coordinating their actions we can describe the situation as a coordination game. The role of leadership in such games has been described by other authors as one of contributing to the creation of focal points but, the questions of why there are leaders and who becomes leader remain untouched.
"If we answer these questions right off the top of our heads, many of us will probably say something like: there has to be someone to take charge, make decisions and take responsibility; to tell us what to do and guide us in difficult situations; someone that has the full picture and the authority to act on it, etc. In short: We need someone who makes decisions for us.
"In this paper, that kind of answer will serve as my point of departure for developing and motivating another way of incorporating leadership into economic analyses, for explaining why leaders are important and who becomes the leader. In short, what I suggest is that the role of a leader is to be the focal point, or the thing being coordinated upon, rather than to help others develop focal points or coordinate on actions.
"The key assumptions are that the individuals in such groups will be better off if they coordinate their actions, and that they can chose to delegate their choice of action to another individual. As a first step, I show that there may be greater chances of achieving coordination on a person than on an action, and give conditions for when this is true. This result becomes even stronger if coordination is repeatedly required, and it is possible to delegate to one individual to choose actions at several coordination occasions. I then develop a model for which the individuals will chose to delegate their choice of action to, i.e. who will be the leader. I also show how norms and traditions can further increase the chances of achieving coordination on a person and discuss some implications of heterogeneity and group size."
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