Team formation and biased self-attribution

There exists extensive evidence that people learn positively about themselves. We build on this finding to develop a model of team formation in the workplace. We show that learning positively about oneself systematically undermines the formation of teams. Agents becoming overconfident tend to ask for an excessive share of the group outcome. Positive learning generates divergence in workers' beliefs and hampers efficient team formation. We analyze possible solutions to insufficient teamwork. We establish that hiding information from workers can raise efficiency. We find that team contracts based on a revelation game as well as the presence of a team manager can improve cooperation. However, full efficiency is never achieved. We apply our model to co-authorship and to organizational issues. JEL codes: C72, D23, D82, K12, M12, M14, M54