Leadership heuristic

Abstract

The economics literature offers at least two main explanations of why individuals adopt the heuristic of following their leader’s suggestion: First, the leader has information or a talent relevant to the task at hand and, second, the leader’s suggestion helps to reduce uncertainty and to coordinate the group on one choice. The psychology literature offers another explanation: The leader, acting as an “ethical example,” helps to increase job satisfaction, performance, and prosocial behavior. Both lines of literature, although in different ways, assume rational choice on the part of followers. Neither literature addresses the question: Would people adopt the leadership heuristic if the leader lacks any relevant information, talent advantage, ethical character, or other desirable traits? We report experimental evidence that suggests the answer is yes. In our experiment, leaders suggest the outcome of a fair “coin toss.” Leaders vary in (irrelevant) “information” and (irrelevant) “ability” possessed. Although there is no feedback after each period, we find that one-third of all the decisions of the participants heuristically follow the leader’s choice. This is surprising given that, first, the leader’s choice is irrelevant and, second, to follow it would be payoff-reducing. Payoff-reducing choices of subjects are more frequent with irrelevantly informed leaders than with irrelevantly talented leaders. Crucially, we also show that the findings are not driven by lack of understanding of random events. In short, neither the hot-hand and gambler’s fallacies nor attributes that might inspire trust/loyalty can explain subjects’ choices.