Discussion Papers 745
5 Experimental results
Conclusion 3: Participants do choose team effort that is above the equilibrium prediction.
They do not realize profits, though, that are significantly higher than the equi-
librium profits—with the exception of the high-cost players.
Prediction 4: Participants choose higher team effort under voluntary teaming than under
enforced teaming.
Comparing average effort in the ENFORCED SYM to that in the VOLUNTARY SYM treat-
ment, we observe that under enforced teaming effort is 35.68 (standard deviation of 19.45)
and, thus, significantly lower than under voluntary teaming where it is 50.10 (u-test, 5-percent
significance).8 Initially, however there is no statistically significant difference: enforced team
effort in the first period is 41.88; whereas, voluntary team effort in the first period that team
remuneration is realized is 45.00 (u-test).
Enforced team effort is significantly above the equilibrium effort of 25 (Wilcoxon test, 5-
percent significance) and significantly below the joint profit-maximizing effort of 50 (Wil-
coxon test, 2-percent significance). Recall that, in contrast to this latter result, voluntary team
effort is not significantly different from 50.
Figure 1 compares the density of voluntary and enforced team effort. While we rarely observe
enforced effort above the joint profit-maximizing level of 50 (15 percent of all observations
above 50, 72 percent below), voluntary effort seems to be allocated around 50 (37 percent of
all observations above, 38 below). Effort levels above 50 might be used as a signal for one’s
willingness to cooperate with the other, in particular if one expects the other to make an effort
below 50 in the current period.9 But, they could also simply be due to random decision mak-
ing and/or misunderstanding of the payoff function. The latter is unlikely to account for the
majority of the observations above 50 in the voluntary teaming treatment as we observe only
relatively few effort choices above 50 in the enforced teaming treatment. It could be seen as
an unfortunate drawback of our experimental design that the middle of the strategy space
coincides with the joint profit-maximizing effort, as in some cases participants might have
just gone toward the middle of the strategy space. However, as will be seen below, this midd-
8 Similar to the voluntary team effort, enforced team effort shows neither a statistically significant decrease nor a
statistically significant increase from the first set of set of 15 periods to the second set of set of 15 periods, nor
does its standard deviation (Wilcoxon tests).
9 The payoff function is relatively flat around the optimum so that the cost of going slightly above it is not very
high.
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