We show that if identical members first decide on the sharing technology (stage I) taking into account their subsequent effort supply (stage II) decisions, the resulting contractarian sharing technology (constitution) channels individual self-seeking towards team (Pareto) optimum. Voting with one's feet and open entry can ensure symmetry and majoritarian decision making in the real world teams. The model helps explain the differential performance of the Israeli Kibbutz and the Russian Kolkhoz.

We first show that the Generalized Sharing mechanism which is exhaustive, allows a team of identical members voluntarily supplying the observable effort to attain Pareto efficient production under increasing returns provided team size is allowed to vary. We then show that where true effort is imperfectly observable (moral hazard) Pareto efficient production under nonconstant returns to scale is still attainable by varying team size.