Team selection with asymmetric agents

In shallow markets where there are mutual gains from cooperation among agen ts, collusive behavior may occur even if it does not constitute a Nash equi librium. Yet, such behavior is rarely sustainable. Bolle (1994) reports the results of one-period team selection experiments in which subjects often d id not follow the Nash equilibrium behavior but engaged in tacit collusion. We test the robustness of Bolle's findings by introducing asymmetry into s ubjects' characteristics and repeating the experiment for a number of perio ds. We find that collusion is not sustainable and the outcomes converge to levels close to the Nash equilibrium. However, the agent's actions stayed s lightly above the Nash equilibrium level in all experiments. (C) 1999 Elsev ier Science B.V. All rights reserved.