Leadership and peer effects

Consider an organization composed by a Leader and by a finite group of agents (or followers). The Leader has some ideal organization composition or vector of preferred actions one for each agent and can invest in costly socialization trying to instill this “corporate culture” in all the agents of the organization. Each agent has as well her ideal action. When an agent makes a decision each period her behavior is driven by two competing motives: she wants her behavior to agree with her personal ideal action and she wants also her behavior to be as close as possible to the average behavior of her peers. Ideal actions or preferences evolve over time. There are two sources of preference (and therefore, action) change. On the one hand, there exists a costly corporate socialization effort exerted by the Leader trying to transform the ideal action of each agent into his own ideal action. On the other hand, each agent’s ideal action changes in the direction of actual behavior (self-persuasion or cognitive dissonance). We are interested in the long-run outcomes of this situation and in particular in the ability of the Leader to fully instil the corporate culture in the members of the organization.