Heine, F. and Riedl, A. (2026). Let’s (not) escalate this! Leadership and communication in a group contest European Economic Review, 181.

Economic and social situations where groups have to compete are ubiquitous. Such group contests create both a coordination problem within and between groups. Introducing leaders may help to mitigate these coordination problems, but little is known about the effect of leadership in group contests. In a group contest experiment, we compare two types of leadership – leading-by-example and transactional leadership – and also investigate the effect of communication between leaders under both leadership styles. We find that the introduction of leaders mostly increases contest investment. Transactional leaders increase followers{\textquoteright} investment through the allocation of a relatively larger share of the prize to followers who have invested more. Communication between leaders decreases contest investments when there is leading-by-example but not when there is transactional leadership. Overall, leaders do not mitigate the over-investment problem in group contests.