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

Listed author(s):
  • Sotiris Georganas
  • Mirco Tonin
  • Michael Vlassopoulos

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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2014/wp-cesifo-2014-01/cesifo1_wp4572.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4572.

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Date of creation: 2014
Handle: RePEc:ces:ceswps:_4572
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  1. 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.
  2. Eriksson, Tor & Poulsen, Anders & Villeval, Marie Claire, 2008. "Feedback and Incentives: Experimental Evidence," IZA Discussion Papers 3440, Institute for the Study of Labor (IZA).
  3. Alexandre Mas & Enrico Moretti, 2006. "Peers at Work," NBER Working Papers 12508, National Bureau of Economic Research, Inc.
  4. 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.
  5. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
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  8. David Gill & Victoria Prowse, 2011. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," Discussion Papers 2011001, University of Oxford, Nuffield College.
  9. Charles Bellemare & Patrick Lepage & Bruce Shearer, 2009. "Peer Pressure, Incentives, and Gender: an Experimental Analysis of Motivation in the Workplace," Cahiers de recherche 0901, CIRPEE.
  10. Ernst Fehr & Lorenz Goette, 2007. "Do workers work more if wages are high? Evidence from a randomized field experiment," Natural Field Experiments 00240, The Field Experiments Website.
  11. Jordi Blanes i Vidal & Mareike Nossol, 2011. "Tournaments Without Prizes: Evidence from Personnel Records," Management Science, INFORMS, vol. 57(10), pages 1721-1736, October.
  12. Josse Delfgaauw & Robert Dur & Joeri Sol & Willem Verbeke, 2013. "Tournament Incentives in the Field: Gender Differences in the Workplace," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 305-326.
  13. Manski, C.F., 1991. "Identification of Endogenous Social Effects: the Reflection Problem," Working papers 9127, Wisconsin Madison - Social Systems.
  14. Armin Falk & Andrea Ichino, 2006. "Clean Evidence on Peer Effects," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 39-58, January.
  15. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2005. "Large stakes and big mistakes," Working Papers 05-11, Federal Reserve Bank of Boston.
  16. Gill, David & Prowse, Victoria, 2012. "Gender differences and dynamics in competition: the role of luck," MPRA Paper 38220, University Library of Munich, Germany.
  17. Colin Camerer & Linda Babcock & George Loewenstein & Richard Thaler, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 407-441.
  18. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
  19. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
  20. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  21. Philip Babcock & Kelly Bedard & Gary Charness & John Hartman & Heather Royer, 2015. "Letting Down The Team? Social Effects Of Team Incentives," Journal of the European Economic Association, European Economic Association, vol. 13(5), pages 841-870, October.
  22. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-877, October.
  23. 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.
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