Teamwork and cooperation between workers can be of
substantial value to a firm, yet firms often differ in
their level of worker cooperation. We show that these
differences can be the result of competition in the
labor market if workers have heterogeneous preferences
and preferences are private information. In our model
there are two types of workers: selfish workers who only
respond to monetary incentives, and conditionally
cooperative workers who might voluntarily provide team
work if their co-workers do the same. We show that there
is no pooling in equilibrium, and that workers
self-select into firms that differ in their incentives
as well as their consequential level of team work. Our
model can explain why firms develop different corporate
cultures in an ex-ante symmetric environment. pdf 2006
