Discussion Papers 745
5 Experimental results
due to only four independent observations in each category, we observe that participants learn
the optimal private effort: from the first set of 15 periods to the last set of 15 periods, the
percentage of optimal choices significantly increases (Wilcoxon test, 10-percent significance).
Conclusion 2: On the aggregate, participants choose the optimal private effort. However,
only about 50 percent of the individual choices are optimal. The percentage of
optimal choices shows a significant tendency to increase over time.
Prediction 3: Under team remuneration, participants choose an effort above the equilib-
rium prediction.
In the VOLUNTARY SYM treatment, the average effort over all periods with team remunera-
tion is 50.10 (standard deviation of 17.34) and significantly above 25, the dominant strategy
in the case of team remuneration (binomial test, 5-percent significance).4 Thus, in the case of
team remuneration, our experimental evidence is similar to the results in public-goods ex-
periments: effort is higher than predicted by the game-theoretical solution.
Interestingly, the observed effort is not significantly different from the Pareto optimum of 50
(Wilcoxon test). Note that in our experimental game, in contrast to most public-goods expe-
riments, the optimum lies in the interior of the strategy space. If the Pareto optimum lies at the
upper limit of the strategy space, participants can never err around it: deviations from the
Pareto optimum are always below. This raises the concern whether it is due to this design
issue that in most public-goods experiments contributions, although higher than in equilibri-
um, are still far below the Pareto optimum (see the related discussion on corner equilibria in
Andreoni 1995, Ledyard 1995, Keser 1996, and Sefton and Steinberg 1996). Our experimen-
tal results give support to this concern as they show that, on the aggregate, participants make
efforts right at the Pareto-optimal level. This implies that effort levels above the optimum
have been chosen to the same extent as those below.
Over all periods, the resulting average profit in team remuneration is 220.08 and significantly
higher than in private remuneration, where it is 174.35 (Wilcoxon test, 10-percent signifi-
4 From the first set of 15 periods to the last set of 15 periods, we observe no significant increase or decrease in
the team effort, but a decrease in its standard deviation from 20.54 to 11.91 (Wilcoxon test, 5-percent signifi-
cance) signaling a larger cooperative consensus over time.
14