Preference communication and leadership in group decision-making

Abstract

We report results from a laboratory experiment that explores the effects of preference communication and leader selection mechanisms in group decision-making. In a setting where all members of a group get the same payoff based on the leader's decision of how much risk to take, we study (1) how group members communicate their preferences to the leader, (2) whether and how the leader incorporates the communicated preferences into his/her decision. We vary the leader selection mechanism as a treatment variable and consider cases where the leader is exogenously appointed or voluntarily self-selects into the position. We find that communicated preferences have a significant effect on actual group decisions, and that leaders' compromise between their own preferences and the preferences of others. The data also reveal that individual characteristics matter in both what kind of suggestions are communicated to the leader, and whether leaders are likely to stick to their own preferences or compromise when making group decisions: Women and individuals who are more trusting of others are more likely to manipulate their own preferences when communicating them and more likely to compromise in response to others' preferences as leaders.