Voluntary Teaming and Effort



Discussion Papers 745

4 Experimental design

The two structural variants are voluntary teaming (VOLUNTARY), which is exactly the effort
game described above, and enforced teaming (ENFORCED), where the players play only the
second stage of the game in enforced team remuneration. This allows us to investigate Predic-
tion 4, which says that participants choose higher team effort under voluntary teaming than
under enforced teaming. For each of the four treatments we have eight independent observa-
tions, based on eight pairs of two participants each.

Table 1 presents the parameters used in the SYM and ASYM treatments and the theoretical
predictions for the second stage of the game in each of the two parameterizations. Note that in
the case of team remuneration the second stage has the nature of a voluntary-contribution-to-
a-public-good game where both the dominant strategy solution and the optimum (joint profit-
maximizing solution) lie in the interior of the strategy space.

Table 1

Parameter values and theoretical predictions for the second stage of the game

Treatment

ki

ei *

z? .* *
ei

et '

∏ *

∏ **

π 1

SYM

i = 1, 2
p = 9, t = 10

1/10      45       25       50     202.5    187.5     250

ASYM

i = 1 (low cost)

i = 2 (high cost)
P = 7, t = 8

1/10      35       20       40      122.5     104      128

1/8       28       16       32       98       112      160

ei * player i ’s optimal effort under private remuneration

ei ** player i’s equilibrium effort (dominant strategy) under team remuneration

ei'      player i ’s joint profit-maximizing effort under team remuneration

Πi *    player i ’s maximum profit under private remuneration

Πi* *   player i ’s equilibrium profit under team remuneration

Πi '     player i ’s profit in the joint profit-maximizing solution under team remuneration

p      factor of private remuneration

t       factor of team remuneration

ki       individual cost factor

In the SYM parameterization, each player's maximal profit in the case of private remuneration
is larger than his equilibrium profit in the case of team remuneration. It follows that in the
subgame perfect equilibrium solution of the symmetric effort game both players choose pri-
vate remuneration and an effort of 45. This yields a profit of 202.5 to each player. However, if

10



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