Team Formation and Self-serving Biases

There exists extensive evidence that people learn positively about themselves. We build on this finding to develop a model of team formation in the workplace. We show that learning positively about oneself systematically undermines the formation of teams. Agents becoming overconfident tend to ask for an excessive share of the group outcome. Positive learning generates divergence in workers' beliefs and hampers efficient team formation. This result is shown to be robust to high degrees of workers' sophistication. We finally apply our model to co-authorship and organizational issues.