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Peer pressure and productivity: The role of observing and being observed

Author

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  • Georganas, Sotiris
  • Tonin, Mirco
  • Vlassopoulos, Michael

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. To assess the importance of payoff externalities in the emergence of peer effects, 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.

Suggested Citation

  • Georganas, Sotiris & Tonin, Mirco & Vlassopoulos, Michael, 2015. "Peer pressure and productivity: The role of observing and being observed," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 223-232.
  • Handle: RePEc:eee:jeborg:v:117:y:2015:i:c:p:223-232
    DOI: 10.1016/j.jebo.2015.06.014
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    Cited by:

    1. Beugnot, Julie & Fortin, Bernard & Lacroix, Guy & Villeval, Marie Claire, 2017. "Gender and Peer Effects in Social Networks," IZA Discussion Papers 10588, Institute for the Study of Labor (IZA).
    2. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Cahiers de recherche 1320, CIRPEE.
    3. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Cahiers de recherche 1320, CIRPEE.
    4. Gerhards, Leonie & Gravert, Christina, 2016. "Because of you I did not give up - How peers affect perseverance," Working Papers in Economics 659, University of Gothenburg, Department of Economics.
    5. Mario Lackner & Hendrik Sonnabend, 2017. "Coping with advantageous inequity - Field evidence from professional penalty kicking," Economics working papers 2017-21, Department of Economics, Johannes Kepler University Linz, Austria.
    6. Harb-Wu, Ken & Krumer, Alex, 2017. "Choking Under Pressure in Front of a Supportive Audience: Evidence from Professional Biathlon," Economics Working Paper Series 1717, University of St. Gallen, School of Economics and Political Science.
    7. Felipe Augusto de Araujo & Erin Carbone & Lynn Conell-Price & Marli W. Dunietz & Ania Jaroszewicz & Rachel Landsman & Diego Lamé & Lise Vesterlund & Stephanie Wang & Alistair J. Wilson, 2015. "The Effect of Incentives on Real Effort: Evidence from the Slider Task," CESifo Working Paper Series 5372, CESifo Group Munich.
    8. Krumer, Alex & Lechner, Michael, 2016. "Midweek Effect on Performance: Evidence from the German Soccer Bundesliga," Economics Working Paper Series 1609, University of St. Gallen, School of Economics and Political Science.
    9. Kräkel, Matthias, 2016. "Peer effects and incentives," Games and Economic Behavior, Elsevier, vol. 97(C), pages 120-127.
    10. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2017. "Gender and Peer Effects on Performance in Social Networks," Working Papers 1711, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    11. 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).
    12. Dimant, Eugen, 2015. "On Peer Effects: Behavioral Contagion of (Un)Ethical Behavior and the Role of Social Identity," MPRA Paper 68732, University Library of Munich, Germany.
    13. Banuri, Sheheryar & Keefer, Philip, 2016. "Pro-social motivation, effort and the call to public service," European Economic Review, Elsevier, vol. 83(C), pages 139-164.
    14. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Cahiers de recherche 1320, CIRPEE.
    15. Gall, Thomas & Hu, Xiaocheng & Vlassopoulos, Michael, 2016. "Dynamic Incentive Effects of Team Formation: Experimental Evidence," IZA Discussion Papers 10393, Institute for the Study of Labor (IZA).
    16. 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.
    17. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Cahiers de recherche 1320, CIRPEE.

    More about this item

    Keywords

    Peer effects; Piece rate; Team incentives; Real-effort experiment;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M59 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Other

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