Career consequences of cooperation
I have written about coordination games in the past to describe the important role communication plays in coordinating actions in a firm or on a global scale. But coordination games are able to tell us so much more about how businesses and the economy works.
As an example, let’s take a look at a study of 910 employees of a large software company in Germany (I think we can all guess which one that is). These employees were asked to participate in a typical coordination game where they were given 10 Euros and randomly joined with two other employees to form a team. Each team member was asked to donate part or all of the 10 Euros to a common pool. The money the three employees donated to the common pool would then be multiplied by 1.5 and split evenly amongst the three team members. Meanwhile, the money each employee kept to himself (or herself) would remain as is but could be taken home. Obviously, a homo economicus would choose the selfish route and keep 10 Euros to himself while benefitting from whatever the other team members put into the common pool. The optimal solution, on the other hand, would be for all team members to put all of their money into the common pool to maximise their returns.
Before the employees participated in the game they were asked to estimate, how much money they would donate to the common pool and how much on average other people would donate to the common pool. So-called net takers (I’ll explain in a minute what this means) promised to donate EUR 5.44 to the pool, which already was much less than the promised donation of Matchers and Givers. What is funny, though is that each group thought they would give more into the pool than others would. Hence, every group thought they were very generous and put in more to the team effort than others.
Cooperative attitudes in the coordination game
Source: Deversi et al. (2020).
But once they had to actually donate to a common pool, the conditional contribution (i.e. the contribution to the pool conditional on the contributions of other team members) dropped even lower. And this is what allowed the researchers to differentiate the three groups. Net takers are employees who on average donate less than 5 Euro to the common pool, i.e. they keep more money to themselves than they donate to a team effort. Matchers are employees who on average donate as much money to the common pool as they keep to themselves. They are people who match the effort of other team members. Meanwhile, Givers are the true team players who keep less to themselves than what they put into the common pool.
Note, how every group reacts to the signal of other team members and tends to donate less to the common pool once they know how much the other team members donate. In other words, everyone adjusts their team effort to the level of cooperation provided by other team members. The group that comes closest to its unconditional cooperation level is the Givers, while for the Net Takers their own team effort drops the most relative to the unconditional donation.
What is good to know, I think, is that Net Takers seem to be in a minority. In the experiment, only 22% of employees were Net Takers, while 40% were Matchers and 38% Givers. So selfish behaviour isn’t the norm.
One of the benefits of the study was that employee behaviour in the experiment could be matched with a rich set of employee data from the company. This allowed the researchers to see if Givers were also Givers in a business environment (short answer: yes) and if being a Giver lead to faster career advancement and higher bonuses. It turns out that Givers – unfortunately – do not benefit financially from their team spirit. They got on average lower wage increases and smaller bonuses than the Net Takers. What the Givers did get, on the other hand, is lots of nonfinancial rewards, ranging from nonfinancial appreciation (the kind of employee of the month thingy) to better social relationships and friendships at work. In short, the Givers were more liked as colleagues than the Net Takers. Maybe if you are in a position to decide on bonuses next year, you should think about this pattern and ask yourself if this is really fair and what kind of signal you send to your employees if you follow in the footsteps of this German software company.
Financial rewards for Givers and Takers
Source: Deversi et al. (2020).