Public Good Provision in Inter-team Conflicts: Effects of Asymmetry and Profit-sharing Rule

A fundamental problem in organizations is designing mechanisms for eliciting voluntary contributions from individual members of a team who are entrapped in a social dilemma. To solve the problem, we utilize a game-theoretical framework that embeds the traditional within-team social dilemma in a between-team competition for an exogenously determined prize. In equilibrium, such competition enhances the incentive to contribute, thereby reducing free-riding. Extending existing literature, we focus on asymmetric competitions between teams of unequal size, and competitions between more than two teams. Comparing two protocols for sharing the prize-egalitarian and proportional profit-sharing rules-we find that (i) free-riding diminishes and (ii) team members contribute more toward their team's effort when they belong to the larger team and when the profit-sharing rule is proportional. (iii) Additionally, under the egalitarian profit-sharing rule team members contribute more than predicted by the equilibrium solution. We discuss implications of our findings for eliciting contributions in competitive environments. Copyright (C) 2009 John Wiley & Sons, Ltd.