Discussion Papers 745
1 Introduction
reciprocity principle or, in other words, conditional cooperation (e.g., Keser and van Winden
2000, Keser 2000, 2002, Fehr and Gachter 2000a, Fischbacher, Gachter and Fehr 2001).
In the majority of experiments, including those by Nalbantian and Schotter, participants are
told that they are members of a team or a group. They cannot choose whether to be in a group
or select the group or individual group members (with the exception of Ehrhart and Keser
1999, Hauk and Nagel 2001, Hauk 2003, Coricelli, Fehr and Fellner 2004, Page, Putterman
and Unel 2005, Charness and Yang 2007). It is an important point of our investigation
whether participants, when they have the choice of either private or team remuneration, will
choose team remuneration at all. We have parameterized our experimental games such that in
the subgame-perfect equilibrium participants choose private remuneration although social
efficiency would require them to choose team remuneration.
The subsequent question then is whether participants do provide cooperative efforts when
they have chosen team remuneration. The above mentioned signaling argument would say
yes. Theoretically, signaling relates to a forward induction argument rather than the backward
induction on which the subgame perfect equilibrium is built. The next question then pertains
to dynamics in the decision making, which could not only affect effort but also remuneration
choices.
To evaluate the robustness of our observations with respect to the choice of the remuneration
mode and effort, we examine both a symmetric and an asymmetric parameterization of our
game. Asymmetry in the players’ effort costs makes the definition of a cooperative goal more
difficult (e.g., Selten, Mitzkewitz and Uhlich 1997). It reflects heterogeneity of the team
members, an aspect that is often neglected in experimental investigations that tend to focus on
symmetric situations. Different effort costs can reflect diverse abilities or skills among team
members. They can also reflect diverse organizational cultures coming together after merger.
The understanding of divergent behavior in symmetric and asymmetric team situations is an
important human capital management issue. Abramson et al. (2002), for example, argue that
increased attention to differences and how individuals from different backgrounds work to-
gether is necessary to create workplaces in which employees work together in a cooperative,
productive manner. 1
1 It is sometimes argued that worker heterogeneity in teams leads to better team outcomes due to mutual learning
and complementarities (Hamilton, Nickerson and Owan 2003, Surwiecki 2005). Our experimental design, how-
ever, does not allow for such effects.