Leading by Example Versus Leading by Conditional Commitment

For long-term policy problems such as climate change, which type of leadership is most effective in inducing cooperative behavior from followers? Using lab experiments based on the Collective Risk Social Dilemma Game, we study experimentally whether leading by example outperforms leading by conditional commitment (or vice versa) in enhancing cooperation. While previous research has found that both types of leadership can enhance followers’ contributions, we examine which type of leadership enhance them the most. Subjects interact repeatedly for 16 rounds in groups of four (one leader, three followers). Each subject serves as leader for four consecutive periods, and we consider four different treatments. In each round, each player must decide how much (if anything) of its endowment to contribute to reaching a joint target for the group. Whatever part of the endowment a subject chooses not to contribute will remain in that subject’s personal account until the end of the final round. The joint target is that the group’s total contribution after 16 rounds must meet or exceed 50% of the maximum. If this target is met, each subject gets to keep (with certainty) any savings that remain in his or her personal account after the 16 rounds. In contrast, if the group’s total contribution falls short of the target, the subjects risk losing all of their savings after the final round. This risk will be bigger if the group’s total contribution is closer to zero and smaller if the group’s total contribution is closer to the target of DKK800. In treatment 1 (baseline), all subjects make their decisions simultaneously in each round. In treatment 2, the leader makes its (unconditional) contribution before the followers make theirs (simultaneously). In treatment 3, the leader first makes two binding commitments concerning what its contribution will be (1) if the followers’ average contribution equals at least 50% of their periodic endowment and (2) if the followers’ average contribution fails to reach the 50% mark. The followers then make their decisions (simultaneously), before the computer automatically implements the leader’s decision, depending on whether the followers’ average contribution reaches the 50% mark. Finally, treatment 4 is identical to treatment 3, except that the leader’s commitment is now conditioned on the smallest (rather than the average) follower contribution. We investigate (1) whether average follower contributions differ between treatment 1 on one hand and treatments 2‒4 on the other; (2) whether average follower contributions differ between treatment 2 on one hand and treatments 3‒4 on the other; and (3) whether average follower contributions differ between treatments 3 and 4. Our results have important implications for the design of global climate mitigation policy, specifically how the Nationally Determined Contributions process should be organized and conducted to boost the effectiveness of the 2015 Paris Climate Agreement. These implications are discussed in the paper.