Endogenous group formation in experimental contests

We study endogenous group formation in tournaments employing
experimental three-player contests. We find that players in
endogenously formed alliances cope better with the moral hazard
problem in groups than players who are forced into an alliance.
Also, players who are committed to expending effort above average
choose to stand alone. If these players are forced to play in an
alliance, they invest even more, whereas their co-players choose
lower effort. Anticipation of this exploitation may explain their
preference to stand alone.