We study team formation in real-effort experiments in which participants bargain over a jointly produced outcome. Participants decide between undertaking a task alone or with another participant by releasing the minimum share of the future team outcome that they are willing to accept. We find that the equality norm prevails in a context in which merit could play an important role. The inability of high-ability individuals to claim a large share of the joint profits makes the dissolution of inefficient teams difficult, and results in unprofitable cooperation.
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