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Intergroup competition with an endogenously determined prize level

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  • Chen, Yi-Yi
Abstract
To mitigate free-rider problems in teamwork, this paper uses laboratory experiments to test a mechanism in which a firm creates a competitive environment for its two teams by awarding a prize based on the aggregate output produced by these two teams. The experimental results support the prediction that the proposed mechanism encourages a greater number of team members to make costly contributions. In the experimental protocol with random matching of team members across decision periods, team members are found to over-contribute relative to the theoretical prediction. This result is linked to team members’ beliefs that their team has lower contributions than the competing team. In contrast, with a fixed matching protocol, team members’ over-contributing is linked to conditional cooperation, based on their beliefs about the contributions of other team members.

Suggested Citation

  • Chen, Yi-Yi, 2020. "Intergroup competition with an endogenously determined prize level," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 759-776.
    • Handle: RePEc:eee:jeborg:v:178:y:2020:i:c:p:759-776
    DOI: 10.1016/j.jebo.2020.07.034
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    Cited by:

    1. Wang, Yizi, 2023. "Intergroup competition, group status, and individuals’ cooperation behavior: Evidence from a laboratory experiment," Finance Research Letters, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    Public goods provision; Intergroup competition; Intergroup comparison; Conditional cooperation; Laboratory experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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