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

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Author Info

  • Georganas, Sotiris

    ()
    (Royal Holloway, University of London)

  • Tonin, Mirco

    ()
    (University of Southampton)

  • Vlassopoulos, Michael

    ()
    (University of Southampton)

Abstract

Peer effects arise in situations where workers observe each other's 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 in a non-linear but monotonic way when compensation is based only on own performance.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7523.

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Length: 23 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7523

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

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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. Josse Delfgaauw & Robert Dur & Joeri Sol & Willem Verbeke, 2009. "Tournament Incentives in the Field: Gender Differences in the Workplace," Tinbergen Institute Discussion Papers 09-069/1, Tinbergen Institute, revised 20 Apr 2012.
  3. Victoria Prowse & David Gill, 2009. "A Novel Computerized Real Effort Task Based on Sliders," Economics Series Working Papers 435, University of Oxford, Department of Economics.
  4. Gill, David & Prowse, Victoria L., 2010. "Gender Differences and Dynamics in Competition: The Role of Luck," IZA Discussion Papers 5022, Institute for the Study of Labor (IZA).
  5. 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.
  6. 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.
  7. Armin Falk & Andrea Ichino, 2004. "Clean Evidence on Peer Effects," Levine's Bibliography 666156000000000439, UCLA Department of Economics.
  8. Tor Eriksson & Anders Poulsen & Marie-Claire Villeval, 2008. "Feedback and Incentives : Experimental Evidence," Post-Print halshs-00276396, HAL.
  9. 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.
  10. Bellemare, Charles & Lepage, Patrick & Shearer, Bruce S., 2009. "Peer Pressure, Incentives, and Gender: An Experimental Analysis of Motivation in the Workplace," IZA Discussion Papers 3948, Institute for the Study of Labor (IZA).
  11. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie-Claire Villeval, 2013. "Social Networks and Peer Effects at Work," CIRANO Working Papers, CIRANO 2013s-27, CIRANO.
  12. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers, Rochester, Business - Managerial Economics Research Center 90-07, Rochester, Business - Managerial Economics Research Center.
  13. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 60(3), pages 531-42, July.
  14. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(5), pages 841-77, October.
  15. Jordi Blanes i Vidal & Mareike Nossol, 2011. "Tournaments Without Prizes: Evidence from Personnel Records," Management Science, INFORMS, INFORMS, vol. 57(10), pages 1721-1736, October.
  16. Camerer, Colin & Babcock, Linda & Loewenstein, George & Thaler, Richard, 1996. "Labor Supply of New York City Cab Drivers: One Day At A time," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 960, California Institute of Technology, Division of the Humanities and Social Sciences.
  17. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5768, C.E.P.R. Discussion Papers.
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Cited by:
  1. Roel van Veldhuizen & Hessel Oosterbeek & Joep Sonnemans, 2014. "Peers at Work: From the Field to the Lab," Tinbergen Institute Discussion Papers 14-051/I, Tinbergen Institute.
  2. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Working Papers halshs-00855047, HAL.

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