Discussion Papers 745

4 Experimental design

perfect equilibrium is built. Participants who choose team remuneration are assumed to signal
an interest in earning more than under private remuneration. In the case that the subgame-
perfect equilibrium predicts private remuneration, this implies that participants who choose
team remuneration intend to choose a higher effort than the equilibrium effort, or in other
words, they intend to play more cooperatively than predicted. Assume that the population of
participants consists of a constant proportion of “free riders”—participants who prefer to play
the equilibrium strategy under team remuneration—and “cooperators”—participants who
prefer to cooperate under team remuneration. This implies a self-selected group of coopera-
tors in voluntary teaming, while the participants in enforced teaming are represented by the
entire population that includes the constant proportion of free riders. Thus, we expect a higher
level of cooperation in voluntary teaming than in enforced teaming.

Prediction 5: Participants’ behavior is driven by reciprocity.

A motivational definition of reciprocity has been given by Rabin (1998). If somebody is nice
to you or others, you are inclined to be nice to him; if somebody is mean to you or others, you
are inclined to be mean to him. Many public-goods experiments provide evidence in favor of
reciprocity. In our game, reciprocity can show both in the level of team effort and in the choi-
ce of the remuneration mode. In particular, the choice of private remuneration after teaming
can be a kind of negative reciprocity (punishment) in response to uncooperative team effort
by the other player.

4 Experimental design

To test the above predictions we design several experimental treatments that are specified in
Section 4.1. Section 4.2 describes the organization of the experiments.

4.1 Treatments

In a 2 x 2 treatment design, we examine the four combinations resulting from two different
parameterizations and two structural variants of the effort game. The two parameterizations
are symmetric (SYM), where the two players have the same parameters, and asymmetric
(ASYM), where the two players have different effort costs. Most public-goods experiments
examine symmetric parameterizations. The asymmetric parameterization allows us to exam-
ine the robustness of the behaviors with respect to the five predictions.

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