Abstract
This paper compares the effects of two leadership styles: leading by pre-game communication and leading by example using an iterated voluntary contribution game. We find that pre-game communication increases the level of individual contributions in the game and has essentially the same impact on the level of individual contributions as leading by example. Yet, followers appear to be more motivated towards achieving a socially optimal outcome in leading by example than in leading by pre-game communication. We also find that the content of pre-game communication has a higher impact on individual decisions than the ex post contribution of the leader. However, false messages cause an erosion of trust: participants decrease their contributions if they have received a false message from the leader in the previous period even though leaders are re-assigned in every period.
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