Discussion Papers 745
Abstract
Abstract
In a series of experimental games, each of two players may choose between remuneration
based on either private or team effort. Although at least one of the players has the subgame
perfect equilibrium strategy to choose remuneration based on private effort, we frequently
observe team remuneration chosen by both players. Team remuneration allows for high pay-
off for each player for cooperation, but at the same time provides individual incentives to take
a free ride on the other player's effort. Due to significant cooperation we observe that in team
remuneration participants make higher profits than in private remuneration. We also observe
that, when participants are not given the option of private remuneration, they cooperate sig-
nificantly less.
Keywords: Team effort, voluntary collaboration, experimental economics
JEL classification: C72, C90, H41, J33
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