Pathways to prosocial leadership: an online experiment on the effects of external subsidies and the relative price of giving

Leaders are a part of virtually every group and organization, and while they help solve the various collective action problems that groups face, they can also be unprincipled and incompetent, pursuing their own interests over those of the group. What types of circumstances foster prosocial leadership and motivate leaders to pursue group interests? In a modified dictator game (N = 798), we examine the effects of piece-rate subsidies (or pay per unit of work performed) and the relative price of giving (or the size of the benefit to others for giving) on prosocial behaviour and norms about giving. We find that subsidies increase giving by leaders, that the relative price of giving is unrelated to prosocial behaviour, and that neither affects norms about giving. Furthermore, the introduction and removal of a subsidy do not undermine giving over time. Our results imply that subsidies increase group welfare by motivating leaders to allocate a larger share of resources to group members.