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Pablo Hernández
Haas School of
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Research
Interests
Economics of Organizations, Leadership, Strategy,
Political Economy, Experimental Economics. Working
Papers “On the Origins
of Leadership Through Communication: The Role of Context and Social
Preferences” (Job Market Paper). pdf We offer a new approach to study how groups lacking
formal leaders coordinate change. Using controlled laboratory experiments, we
find that leadership is a critical catalyst for change. A key novelty of our
approach is to exogenously vary the context in which leadership takes place.
By varying the payoffs for not participating in change when others do so, we
identify an interaction effect between the characteristics of leaders and the
underlying context in which leadership emerges. In particular, when these
payoffs are low, leadership is ubiquitous—no special features distinguish
leaders. When change requires overcoming high monetary incentives favoring
the status quo, leaders tend to be “exceptional.” These types of leaders
exhibit a distinct non-monetary taste for mutual cooperation; and in the
cases where they do not have this trait, they present little aversion to
lying. An implication of our results is that intrinsically motivated leaders
are essential for successful innovation.
We study relative performance schemes in
light of social preferences. To the extent players are other regarding, they
provide lower efforts as they internalize the negative externality they
impose on other players. Thus, players with other regarding preferences are
more likely to sustain collusive behavior, as traditionally defined. Our
experiments confirm that this is indeed the case. Each additional
other-regarding group member significantly decreases group effort by about
15%. We also find that when communication is allowed, it is typically
a selfish subject who emerges as a leader and further increases
collusion by suggesting low efforts for the group. Finally, we find that,
when subjects play against simulated players so their actions do not affect
real players’ payoffs, subjects of any social type act as selfish types.
Work in
Progress
Jointly achieving state consolidation and
economic growth must break away from a trap: the more growth is fostered, the
stronger the incentives for challenging state control over resources. We
study the trade-offs facing the ruling elite of a proto-state on its path to
growth and state consolidation. This study is relevant both for the problem of
state formation in historical perspective and to the problem of state
building in modern times. We distinguish between two forms of investment: in
military capacity and productive capacity. We derive lessons for
state-building by showing how investments in military capacity might have to
precede investments in productive capabilities, and how a balance between the
two may have to be maintained to ensure prosperity and peace. We show how
economic shocks and arms innovations may trigger state consolidation and
economic take-off or keep polities in a trap of political conflict and
economic stagnation. In repeated contests with incomplete information, agents take into account that effort exerted in early periods affects play in future rounds--it affects own and others' beliefs. Agents' incentives to win the early tournament depend on its direct payoffs and the expected rewards of future contests. Under some circumstances, it pays off to win to signal strength, but in others to lose to signal weakness--when the uninformed agent is relatively strong (resp. weak) the informed agent has incentives to under-exert (over-exert) effort, relative to one shot games, in order to signal weakness (strength). The intuition for this result is simple: agents will try to avoid making the opponent to believe they are close in ability, because that would create a fierce battle. We show this result holds for Tullock and probit contest success functions.
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