Voluntary Teaming and Effort

Discussion Papers 745

1 Introduction

could thus credibly use the threat of exit to deter shirking by fellow team members. When, by
Lin’s account, individual rights of withdrawal were removed in 1958, productivity dropped
sharply” (Putterman and Skillman 1992, page 598.)

Another aspect, implicit in Lin’s argument, is that prior to 1958 participation was voluntary,
while later on it was enforced. In psychology, reactance is defined as an emotional reaction in
direct contradiction to rules and/or regulations that threaten or eliminate specific behavioral
freedoms (e.g., Baron, Byrne and Branscombe 2006, page 152, and Brehm 1966). In the case
of enforced cooperation without any option of exit, this kind of reaction could arise and ham-
per the cooperative effort. This could have been one of the reasons for the failure of the labor-
managed firm created in former Yugoslavia, which has attracted of lot of attention in the
1960s and 1970s.

In this paper, we examine the behavioral difference in voluntary versus enforced collaboration
in a series of experiments on team effort under profit sharing. In the voluntary collaboration
experiments we allow, in keeping with Lin’s line of reasoning, the choice to renounce team
effort. We address several questions. Our major interest is whether teaming should be volun-
tary or enforced by management. Thus, we compare an environment where employees can
choose between private and team remuneration to one where they have no choice but to work
under team remuneration. We hypothesize that voluntary team effort is greater than enforced
team effort because when subjects voluntarily choose team remuneration they signal interest
in cooperation. Note that we do not examine whether team incentive schemes are more effec-
tive than private incentive schemes.

In our experiments, pairs of participants have to provide costly effort over 30 periods. In each
period, each participant individually chooses an effort as an integer number between 0 and
100. Effort costs are represented by a quadratic function. In an environment where teaming is
enforced, a participant’s remuneration is based on the average of the participant's own effort
and the effort of the participant he or she is paired with. In an environment where teaming is
voluntary, each participant chooses between private or team remuneration before deciding on
the effort in each period. While private remuneration is based on the participant's individual
effort only, team remuneration is based on the average of the participant's own effort and the
effort of his or her team member.

In the case of team remuneration, each of the two participants faces an individual incentive to
take a free ride on the other's effort. The effort of each participant may be considered a volun-

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