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Peer Pressure and Productivity: The Role of Observing and Being Observed

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  • Sotiris Georganas
  • Mirco Tonin
  • Michael Vlassopoulos

Abstract

Peer effects arise in situations where workers observe each others’ work activity. In this paper we disentangle the effect of observing a peer from that of being observed by a peer, by setting up a real effort experiment in which we manipulate the observability of performance. In particular, we randomize subjects into three groups: in the first one subjects are observed by another subject, but do not observe anybody; in the second one subjects observe somebody else’s performance, but are not observed by anybody; in the last group subjects work in isolation, neither observing, nor being observed. We consider both a piece rate compensation scheme, where pay depends solely on own performance, and a team compensation scheme, where pay also depends on the performance of other team members. Overall, we find some evidence that subjects who are observed increase productivity at least initially when compensation is team based, while we find that subjects observing react to what they see when compensation is based only on own performance.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4572.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4572

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Keywords: peer effects; piece rate; team incentives; real-effort experiment;

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References

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  1. Ernst Fehr & Lorenz Götte, 2005. "Do Workers Work More if Wages are High? Evidence from a Randomized Field Experiment," IEW - Working Papers 125, Institute for Empirical Research in Economics - University of Zurich.
  2. Armin Falk & Andrea Ichino, 2004. "Clean Evidence on Peer Effects," Levine's Bibliography 666156000000000439, UCLA Department of Economics.
  3. Gill, David & Prowse, Victoria, 2012. "Gender differences and dynamics in competition: the role of luck," MPRA Paper 38220, University Library of Munich, Germany.
  4. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie-Claire Villeval, 2013. "Social Networks and Peer Effects at Work," CIRANO Working Papers 2013s-27, CIRANO.
  5. Eriksson, Tor & Poulsen, Anders & Villeval, Marie Claire, 2009. "Feedback and incentives: Experimental evidence," Labour Economics, Elsevier, vol. 16(6), pages 679-688, December.
  6. Gill, David & Prowse, Victoria, 2011. "A Novel Computerized Real Effort Task Based on Sliders," IZA Discussion Papers 5801, Institute for the Study of Labor (IZA).
  7. Gill, David & Prowse, Victoria Liza, 2010. "A structural analysis of disappointment aversion in a real effort competition," Discussion Paper Series In Economics And Econometrics 1006, Economics Division, School of Social Sciences, University of Southampton.
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  9. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
  10. Delfgaauw, Josse & Dur, Robert & Sol, Joeri & Verbeke, Willem, 2009. "Tournament Incentives in the Field: Gender Differences in the Workplace," IZA Discussion Papers 4395, Institute for the Study of Labor (IZA).
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  13. Brice Corgnet & Roberto Hernán González & Stephen Rassenti, 2013. "Peer Pressure and Moral Hazard in Teams: Experimental Evidence," Working Papers 13-01, Chapman University, Economic Science Institute.
  14. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 531-42, July.
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  16. Philip Babcock & Kelly Bedard & Gary Charness & John Hartman & Heather Royer, 2011. "Letting Down the Team? Evidence of Social Effects of Team Incentives," NBER Working Papers 16687, National Bureau of Economic Research, Inc.
  17. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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Cited by:
  1. Beugnot, Julie & Fortin, Bernard & Lacroix, Guy & Villeval, Marie Claire, 2013. "Social Networks and Peer Effects at Work," IZA Discussion Papers 7521, Institute for the Study of Labor (IZA).
  2. van Veldhuizen, Roel & Oosterbeek, Hessel & Sonnemans, Joep, 2014. "Peers at work: From the field to the lab," Discussion Papers, Research Unit: Market Behavior SP II 2014-204, Social Science Research Center Berlin (WZB).

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