Collaboration and free-riding in team contests

Abstract

The organization of team contests can enhance productivity if teammates with complementary skills are able to allocate the team’s tasks efficiently, but can also suffer from free-riding incentives. We report the results of a real-effort experiment in which production requires the completion of two complementary tasks, at which workers have heterogeneous skills. We vary whether participants: compete individually; compete in teams where each member must complete each task; or compete in teams where the agents can divide tasks between them and potentially specialize in the task they do best. We report three main results. First, individuals who must work alone divide their work time in a way that is qualitatively consistent with the theoretical predictions, but allocate too little time to their weaker task. Second, there is no difference in productivity or free-riding behavior between individual contests and team contests where teammates cannot specialize. Finally, and most notably, when teammates can divide work tasks, they allocate more time to the tasks they are best at and experience a strong productivity gain. This is true even among teams that cannot communicate – despite the potential for coordination failure or coordination on Pareto dominated equilibria – but the effect is strongest when communication is available.