Efficiency, Team building, and Spillover in a Public-goods Game

The notions of one’s social identity, group membership, and homophily have recentlybecome topics for economic theory and experiments. Yet, since people are members of manygroups (e.g., race, gender, handedness) what determines which identity or identities are the mostsalient in different environments? Further, how do these factors trade off against one’s financialinterest? We conduct public-goods experiments in which we permit endogenous group-formationand vary whether there is a team-building exercise and whether some people receive anendowment twice as much as others receive. We do see evidence that team identity affectsendogenous networks when there is only one endowment type; however, when both identities arepresent, high-endowment participants are strongly attracted to linking up with each other. Oneinteresting result is that the team-building exercise greatly increases the level of contributionwithout respect to whether one is linked to people from one’s team-building exercise.Apparently the positive feeling engendered by the group exercise spills over to participants whowere in another team; however, this is not the case when one group has been in a 4-person teamand the other four participants have not.