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The effect of peer observation on consumption choices: evidence from a lab-in-field experiment

Author

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  • Antonia Grohmann
  • Sahra Sakha

Abstract

We investigate the impact of peer observation on consumption decisions using a lab-in-field experiment. Respondents make consumption decisions either alone or under peer observation. We find evidence for peer effects. We are able to study these further by looking into the mechanism and performing detailed heterogeneity analysis. Concerning the mechanisms, we find evidence for an information channel. Further, we show that the consumption choice is influenced by how many people made the same decision previously, but not by who those people are, hence finding evidence of a psychological channel. Respondents with higher cognitive ability are less susceptible to peer effects, while people living in small villages are more susceptible.

Suggested Citation

  • Antonia Grohmann & Sahra Sakha, 2019. "The effect of peer observation on consumption choices: evidence from a lab-in-field experiment," Applied Economics, Taylor & Francis Journals, vol. 51(55), pages 5937-5951, November.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:55:p:5937-5951
    DOI: 10.1080/00036846.2019.1638499
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    Cited by:

    1. Thrane, Christer & Haugom, Erik, 2020. "Peer effects on restaurant tipping in Norway: An experimental approach," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 244-252.
    2. Gian Italo Bischi & Fabio Tramontana, 2024. "An evolutive model of a boundedly rational consumer with changing preferences and reference group consumption," Annals of Operations Research, Springer, vol. 337(3), pages 891-912, June.
    3. Grohmann, Antonia & Koch, Melanie, 2025. "The effect of social comparison on debt taking: Experimental evidence," Journal of Behavioral and Experimental Finance, Elsevier, vol. 48(C).
    4. Antonia Grohmann & Melanie Koch, 2022. "The Effect of Social Comparison on Debt Taking: Experimental Evidence," Discussion Papers of DIW Berlin 1996, DIW Berlin, German Institute for Economic Research.
    5. Gian Italo Bischi & Fabio Tramontana, 2022. "A Model of Consumer Choice With Bounded Rationality and Reference Quantity," International Journal of Applied Behavioral Economics (IJABE), IGI Global Scientific Publishing, vol. 11(1), pages 1-8, January.
    6. Dhamija, Gaurav & Mookerjee, Mehreen & Ojha, Manini & Roy, Sanket, 2024. "Attitudes and norms about intimate partner violence: What makes women more impressionable?," GLO Discussion Paper Series 1486, Global Labor Organization (GLO).
    7. Mingdi Wang & Biao Luo, 2024. "Research Progress of Peer Effects in Consumption Based on CiteSpace Analysis," Sustainability, MDPI, vol. 16(15), pages 1-22, July.
    8. Tomáš Želinský, 2021. "Intertemporal Choices of Children and Adults from Poor Roma Communities: A Case Study from Slovakia," Eastern European Economics, Taylor & Francis Journals, vol. 59(4), pages 378-405, July.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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