Leadership Economics
Overview of Leadership Economics
What role does this course fill? How is it different from existing courses and research?
Researchers in organizational psychology, sociology, and behavioral economics have developed a considerable body of work about effective leaders. Broadly speaking, this work centers on (1) traits of effective leaders (e.g. emotional intelligence) and (2) behaviors of effective leaders (e.g. situational approach to leadership). Students in the field receive well-researched advice on a range of topics: authentic leadership, resilience, humility, decision making, motivation, conflict management, and more. Yet, these theories largely seem unconnected and siloed. Without a unifying model, students in the field are left with what feels like a list of “dos and don’ts.”
On their own, the existing theories are effective strategies, but they struggle to form a wholistic vision of human behavior. As such, leadership courses focus on “being” and “doing” rather than on developing a coherent system within which a leader is free to innovate and adapt. In other words, the existing work provides a descriptive view of what we have seen work, but it fails to provide a predictive model of what could work or a framework for adapting strategies.
This course attempts to generate a unifying framework of human behavior that highlights where and how leadership can fail. It provides a framework within which students can situate the existing research.
Course Description
Students first study the core economic theory and research on organizational economics, focusing particularly on the principal-agent problem (and solutions) as well as standard team issues such as free-riding. Then, using developments in neuroscience, students are introduced to a mathematical model of human action in which decision-makers experience ambiguity in their utility preferences (sometimes called “Knightian Uncertainty”). This model then informs core tenets of leadership and human action that we explore and apply. From core principles, students learn answers to questions such as why trust is important to team functioning, the value of directed autonomy and good communication, and generate a more mathematical description of soft human capital. The theoretical predictions or our model can be used to understand a variety of well-researched topics in behavioral organization and positive psychology. We explore a mathematical description of optimism, resilience, hope, and the effects of fairness within a team, to name a few.
Course Objectives:
Create a working description of what leads to human action and then derive core principles of leadership. More specifically:
- Understand the mathematical representation of risk-aversion and its various implications
- Model the logic behind information asymmetries and the problems they pose
- Have cursory knowledge of the neuroscience of choice and action
- Mathematically describe the basic functions of human decision-making
- Apply the mathematical model of human action to core leadership tenets (Army doctrine, organizational psychology, sociological approaches, etc.)
Additional Resources:
Overview of Human Action Model (non-technical)
[(incomplete) draft textbook available upon request by email]
[Example course lectures and slides available upon request by email]