Clara C. Raposo

Can Entrenched Lame Ducks Be Optimal? An Economic Model of Leadership and Organizational Change

Assume leaders cannot coerce followers: eective leaders can make changes because other people want to follow them, while ineective lead- ers are unable to make changes because others will tacitly resist. Assume followers and leaders share the same objectives for successful change, but leaders have a limited tenure while followers are long lived. This time pressure for the leader can lead to outcomes in which lame ducks are un- able to attract support towards the end of their tenure. We show that entrenchment, as opposed to early removal of lame ducks, can be optimal because it creates better incentives ex ante. We also consider heterogene- ity in the underlying talent of leaders. If good leaders are those with a higher chance of forming a plan, there is a trade oinvolving the bene…ts of sacking inactive leaders, but in our speci…cation it remains true that entrenchment is optimal.