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Public good provision in inter‐team conflicts: Effects of asymmetry and profit‐sharing rule
Author(s) -
Kugler Tamar,
Rapoport Am,
Pazy Asya
Publication year - 2010
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.667
Subject(s) - social dilemma , profit sharing , dilemma , incentive , microeconomics , free riding , public good , profit (economics) , competition (biology) , prisoner's dilemma , economics , social preferences , business , game theory , ecology , philosophy , finance , epistemology , biology
A fundamental problem in organizations is designing mechanisms for eliciting voluntary contributions from individual members of a team who are entrapped in a social dilemma. To solve the problem, we utilize a game‐theoretical framework that embeds the traditional within‐team social dilemma in a between‐team competition for an exogenously determined prize. In equilibrium, such competition enhances the incentive to contribute, thereby reducing free‐riding. Extending existing literature, we focus on asymmetric competitions between teams of unequal size, and competitions between more than two teams. Comparing two protocols for sharing the prize—egalitarian and proportional profit‐sharing rules—we find that (i) free‐riding diminishes and (ii) team members contribute more toward their team's effort when they belong to the larger team and when the profit‐sharing rule is proportional. (iii) Additionally, under the egalitarian profit‐sharing rule team members contribute more than predicted by the equilibrium solution. We discuss implications of our findings for eliciting contributions in competitive environments. Copyright © 2009 John Wiley & Sons, Ltd.