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Competition for talent: heterogenous abilities in team production

Author

Listed:
  • Abhijit Ramalingam

    (Walker College of Business, Appalachian State University)

  • Brock V. Stoddard

    (Walker College of Business, Appalachian State University)

  • James M. Walker

    (Indiana University)

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.

Suggested Citation

  • Abhijit Ramalingam & Brock V. Stoddard & James M. Walker, 2024. "Competition for talent: heterogenous abilities in team production," Experimental Economics, Springer;Economic Science Association, vol. 27(5), pages 1033-1067, November.
  • Handle: RePEc:kap:expeco:v:27:y:2024:i:5:d:10.1007_s10683-024-09842-0
    DOI: 10.1007/s10683-024-09842-0
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    More about this item

    Keywords

    Public goods; Experiment; Divided loyalties; Competition; Heterogeneity; Reciprocity;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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