Essays in the Political Economy of Organisations: Power, Leadership and Coordination Lina María Restrepo-Plaza PhD in Economics University of East Anglia School of Economics July 2017 © This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognise that its copyright rests with the author and that use of any information derived there from must be in accordance with current UK Copyright Law. In addition, any quotation or extract must include full attribution 1 Abstract This study provides with behavioural insights on three components of the political economy of organisations namely power, leadership and coordination. In the second chapter, we implement a lab experiment to study how the experience of power affects the value given to powerful positions. We contribute to the literature on the value of decisions rights by replicating in the lab a real-life-like power asymmetry. Moreover, we manipulate the status and the legitimacy of the powerful positions, and elicit the value of power from the powerful and the powerless reference points. We find that those who have experienced and exercised power are willing to let go substantial pecuniary compensations to remain in charge. The third chapter experimentally compares teams versus individual in a coordination task. Since in our setting teams do not necessarily outperform individuals, our results partially contrast the state of the art on this arena. We contribute to the literature on organisational behaviour by pointing out the importance of coordinating institutions such as voting rules, communication, joint incentives, etc., to promote teams’ coordination. Finally, we empirically study the role of formal leaders in real-life organisations: football teams. We contribute to the literature in organisational behaviour in sports by implementing an adaptation of the red card into the sport production function to estimate the relative effect of a captain dismissal in both Northern and Southern European leagues. We find context specific results, as we find that the captain dismissal only affects the match outcomes in Southern leagues when the away captain is sent-off. This result might open a window to incorporate leadership and cross cultural studies in the literature of the home team advantage. 2 Content List Chapter 1. General Introduction ................................................................................................ 8 Chapter 2. The Behavioural Toxicity of Power ....................................................................... 11 1. Introduction ....................................................................................................................... 12 2. Related Literature ............................................................................................................. 15 3. Experimental Design and Procedures ............................................................................. 17 4. Results ................................................................................................................................ 21 4.1 Ruling on rates ............................................................................................................ 21 4.2 No Power .................................................................................................................... 24 4.3 Minimal Power ........................................................................................................... 25 4.4 Disentangling the components of the bids for power ................................................. 29 4.5 Summary .................................................................................................................... 33 4.6 Underbidding bias ...................................................................................................... 34 4.7 The Effect of Power on Individual Productivity ........................................................ 37 5. Conclusions ........................................................................................................................ 39 Chapter 3. The Cost of Dissent ................................................................................................. 42 1. Introduction ....................................................................................................................... 43 2. Related Literature ............................................................................................................. 45 3. Experimental Design ......................................................................................................... 47 4. Experimental Results ........................................................................................................ 52 4.1. Individual effort .......................................................................................................... 52 4.2. Wasted Effort .............................................................................................................. 57 4.3. Conditional Contribution Adjustment ........................................................................ 58 4.4. Efficiency ................................................................................................................... 60 5. Conclusions ........................................................................................................................ 61 Chapter 4. Leadership and Team Performance: A Comparison between Northern and Southern European Soccer........................................................................................................ 64 1. Introduction ....................................................................................................................... 65 2. Related Literature ............................................................................................................. 66 3. Northern and Southern Leagues Background ............................................................... 70 4. Methodology ...................................................................................................................... 74 5. Results ................................................................................................................................ 79 5.1. Descriptive statistics ................................................................................................... 79 5.2. The Relative Effect of a Red Card ............................................................................. 83 Chapter 5. General Concluding Remarks ............................................................................... 89 References ................................................................................................................................... 94 Appendix ................................................................................................................................... 101 A.1.1. Complementary figures and tables chapter 1 ............................................................. 102 A.1.2. Risk aversion analysis ................................................................................................... 106 A.1.3 Experimental instructions chapter 1 ............................................................................ 107 A.2.1. Experimental instructions chapter 2 ........................................................................... 119 3 A.3.1. Description of the Squawka performance score chapter 3 ....................................... 121 A.3.2. Complementary tables and figures chapter 3 ............................................................. 122 A.3.3. Complementary bivariate analysis chapter 3 ............................................................. 124 A.3.4. Complementary captain absence analysis chapter 3 ................................................. 126 A.3.5. Captain attributes chapter 3 ........................................................................................ 127 4 Table List Table 1.1 Experimental design 19 Table 1.2 Treatments summary Table 21 Table 1.3 WTP, WTA and Gap: BL-High vs NP 26 Table 1.4 WTP, WTA and Gap 2x2 Conditions 28 Participation of risk aversion in the actual value of power by treatment and Table 1.5 role 31 Table 1.6 Participation of the material benefits in the actual value of power 32 Table 1.7 Participation of noise (confusion-demand-framing) 33 Table 1.8 Corrected WTP 36 Table 1.9 The WTP and WTA for the A position and the Gap by treatment (control) 102 Participation of the components in the actual value of power by treatment Table 1.10 (controls) and role 103 Table 1.11 Individual ruling categories by categorisation method 104 Table 2.1 Descriptive statistics 52 Table 2.2 Contribution and Provision Estimations 53 Table 2.3 Contribution Estimation by Nash Scenario 56 Table 2.4 Wasted Effort and adjustment (I-WLM versus T-WLM) 57 Table 2.5 Conditional Contribution 59 Table 2.6 Conditional Contribution Adjustment 60 Table 2.7 Earnings Estimations 61 Table 3.1 Southern and Northern League’s Characteristics 73 Table 3.2 Variables’ Definitions 77 Table 3.3 Descriptive Statistics of home and away teams 79 Table 3.4 Home vs. Away Red Cards 80 Table 3.5 Captains and Non-Captain Characteristics 81 Table 3.6 Red Card Events and Time Played by Captains 82 Table 3.7 Linear Regressions for Goal Differences, Standard errors in parentheses 86 Table 3.8 Linear Regressions for Goal Differences by Leagues 122 Table 3.9 Means of Captain Characteristics