Paolo Crosetto was kind enough to make the above presentation on my behalf at the ESA European conference in Köln this year. I was not able to make it but was kept on the program so, learning this the day before, we jumped on the opportunity and I wrote the presentation in an afternoon.
The presentation is of a paper we just released on SSRN and RePeC as a Jena Economic Research Paper. The title is “Partnerships, Imperfect Monitoring and Outside Options: Theory and Experimental Evidence”. We designed an original game inspired by literature on public good production, moral hazard and team work. Instead of joint effort translating into some amount of production, joint effort only determines how likely you are to get a reward.
This little change means that issues of imperfect monitoring of the action of others are prevalent in our model. For example, working on a paper, you cannot be sure that failure to get the paper accepted at a top journal was due to lack of effort of your partner or to bad luck (of course, it cannot be your fault!). We think such issues are very important to the sustainability of group work, especially when, as is now so often the case, participants are not in the same place and meet only irregularly.
We got a number of subjects to play the game and found that they displayed a distaste for team work in so far as they choose to exit joint production more frequently than would be efficient. More precisely, they chose to work on their own even when they did believe it would be more efficient to work jointly with their partner. We also found that, unlike in the experimental literature on public good production, they did not seem to vary their effort in joint production as a function of what they expected others to do. Their behavior was of the form: exit joint production if unhappy, stay and keep doing the same if satisfied. Overall, we found that better outside options were detrimental to social welfare, meaning that agents, once committing to team work, were better off being restricted in the range of outside options available to them. This prevented them succumbing to the temptation of leaving the team.
Behavioral public policy 