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Is there no “I” in “Team”? Interindividual-intergroup discontinuity effect in a Cournot competition experiment

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  • Waichman, Israel
  • Blanckenburg, Korbinian von

Abstract

Even though firms consist of teams of individuals, industrial organization experiments are typically conducted under the unitary player assumption with individuals representing firms. Against this practice, there is evidence that individuals’ decisions differ from those made by teams, and also from individuals’ decisions which affect both oneself and others. This study examines the empirical scope of the unitary player assumption (alternatively the “interindividual-intergroup discontinuity effect”) in the context of a Cournot competition experiment. In the first, standard, experiment (216 participants), we find no evidence for the discontinuity effect. Output choices of both individuals and teams are around the Cournot outcome. In a second experiment (198 participants), we use a recommendation to shift participants’ initial disposition towards the (off-equilibrium) collusive output. This triggers the discontinuity effect; individuals choose lower outputs and collude more than teams. This effect is persistent in the second half of the experiment, and is not caused by team-member discussion or by seating team members together. We discuss the interpretations and implications of our results.

Suggested Citation

  • Waichman, Israel & Blanckenburg, Korbinian von, 2020. "Is there no “I” in “Team”? Interindividual-intergroup discontinuity effect in a Cournot competition experiment," Journal of Economic Psychology, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:joepsy:v:77:y:2020:i:c:s0167487018306342
    DOI: 10.1016/j.joep.2019.06.004
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    More about this item

    Keywords

    Decisions-for-others; Discontinuity effect; Unitary player assumption; Cournot oligopoly; Communication; Recommended play; Experimenter demand effect; Experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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