Cooperation or Defection in Teams? Talent Heterogeneity and Task Substitutability in Organizational Strategy

Presenter

Stefano Staffolani (Marche Polytechnic University)

Abstract

This paper analyzes cooperation and defection in teams where agents differ in talent and tasks vary in their degree of substitutability. We study a stylized organizational setting in which a principal assigns workers to teams, sets a minimum effort standard through monitoring, and shares output according to a fixed rule that grants equal compensation to workers. Agents choose between a cooperative effort norm and a minimal effort level that satisfies organizational requirements. Using a CES production technology, we show that the interaction between task substitutability, talent heterogeneity, and effort standards generates distinct behavioral regimes. Cooperation is more likely when required effort is low and tasks are complementary, whereas highly substitutable tasks tend to induce asymmetric behavior, with the more talented agent cooperating and the less talented one free riding. Such behavior arises only when task technology departs from the Cobb–Douglas case and workers differ in talent, and may increase the principal’s payoff. The analysis highlights that free riding and asymmetric effort are not necessarily organizational failures, but can emerge as stable and profitable outcomes of rational organizational design. The results contribute to organizational economics by clarifying how monitoring, talent allocation, and task technology jointly shape cooperative outcomes in teams.