Abstract
We study competition between two groups of individuals with team affiliations, where each group solves a coopetition problem to outperform the other group. Our analysis suggests the presence of a strategic benefit of diversification that goes beyond merely reducing outcome uncertainty. We outline applications in industrial and workplace organization and provide a detailed model of road cycling races, which naturally feature this strategic setup. We find that asymmetric groups tend to cooperate better. Also, having team members in two competing groups is beneficial for a team, as it increases free-riding opportunities in both groups. By analyzing data from over 40 seasons of professional road cycling races, we find empirical evidence in favor of these results. In particular, having a teammate in a group behind positively impacts win probability.
Published Version
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