Follow the leader? A field experiment on social influence

Abstract

We conduct an artefactual field experiment with farmers in endogenously formed groups in rural Malawi to investigate social influence in risk taking. Our experiment minimizes influence through social learning and social image channels. Treatments vary whether individuals observe the behavior of a formally elected leader, an external leader, or a random peer. Results show that peers are most influential, followed by formal leaders, and then external leaders. Exploratory analysis suggests that farmers follow peers because they extract information from their choices and share risks with them; while other forms of social utility are gained from following the example of leaders.