infonet-economy

We analyze the factors that drive an individual’s self-selection decision between (1) working individually and being paid for individual performance and (2) working on a team and being paid for team performance. While the literature has focused on task specific ability as a self-selection criterion, we also investigate the effects of teamwork skills, expectations concerning the task specific ability and teamwork skills of potential teammates, and task type. Thus we account for multidimensional sorting. Considering these additional factors might explain the empirical puzzle that some studies have found a positive relation between an individual’s task specific skills and the propensity to join a team, and others found a negative relation. Confronting our predictions with data from a real-effort pen-and-paper experiment, we find that the less able are attracted by teamwork and team incentives but that teamwork skills and expectations concerning the ability of potential teammates might in fact compensate for this adverse self-selection effect. Regarding task type we find that teamwork is more attractive, if the task offers a high potential for complementarities between team members.