Leading by example versus leading by words in voluntary contribution experiments

This paper compares different forms of leadership in their ability to improve cooperation in a public goods experiment. Leaders either contribute before the others (leading by example) or make a non-binding pledge before all players contribute simultaneously (leading by words). The exogenously imposed leadership is then compared to an endogenous setting where players can choose if and how they want to lead. The results show that in both settings leading by example has significant positive effects on cooperation while leading by words only has small effects as compared to situations without leadership. However, only few subjects choose to lead by example when they have the choice. The majority choose to lead by words or do not want to lead at all. The results also show that leading by example is associated with an institutional effect (players increase their contributions when they have to lead by example) and a selection effect (players who choose to lead by example are particularly cooperative).