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Competition for talent: heterogenous abilities in team production

Published online by Cambridge University Press:  02 April 2025

Abhijit Ramalingam ,
Brock V. Stoddard Open the ORCID record for Brock V. Stoddard [Opens in a new window]  and
James M. Walker
Abhijit Ramalingam*
Affiliation:
Department of Economics, Walker College of Business, Appalachian State University, Boone 28608, NC, USA
Brock V. Stoddard*
Affiliation:
Department of Economics, Walker College of Business, Appalachian State University, Boone 28608, NC, USA
James M. Walker*
Affiliation:
Department of Economics and the Ostrom Workshop, Indiana University, Bloomington 47405, IN, USA
*
[email protected]
[email protected]
[email protected]
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Abstract

Using public goods games in a laboratory setting, we study team-level production, where two teams compete for the resources of a common-member who can benefit from and provide effort in both teams. Intrinsically, the common-member faces divided loyalties. We examine such competition in a setting in which the common-member has productive abilities equal to that of the other team members (dedicated-members), and in two settings where he/she has greater relative potential. When effort (contributions) by the common-member have greater productivity (coupled with higher opportunity costs to contribute) in providing the public good relative to that of dedicated-members, we find team performance is not significantly increased. On the other hand, when the common-member has a greater endowment, sufficient to match the absolute contributions of team members in both teams, there is a significant increase in team performance. The evidence suggests that a norm of reciprocity by dedicated-members based on absolute contributions of the common-member better explains behavior than a norm based on the value added of the common-member's contributions. This behavior, along with fairness norms elicited in a survey, suggests that on average dedicated members do not sufficiently incorporate the common-members' higher opportunity costs in the treatment where his/her productivity is increased. This setting provides an important illustration of where the behavioral response to the type of inequality matters, leading to differences in team efficiency.

Keywords

Public goodsExperimentDivided loyaltiesCompetitionHeterogeneityReciprocity

JEL classification

H41: Public Goods C91: Laboratory, Individual Behavior C92: Laboratory, Group Behavior C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 27 , Issue 5 , November 2024 , pp. 1033 - 1067
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2024

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