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The Effect of Peer Observation on Consumption Choices: Experimental Evidence

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  • Antonia Grohmann
  • Sahra Sakha

Abstract

This paper investigates the impact of peer observation on the consumption decisions of rural households in Thailand using a lab-in-the-field experiment. We find that those groups that observe each other show lower within group standard deviation in their decisions. Thus, we find evidence for conformity. Further, we find that individual's consumption choice is influenced by the group choice controlling for large number of individual, household, and village characteristics. We find that unfamiliarity of the product is counteracted by peer effects. Finally, we find evidence of treatment heterogeneity with regards to cognitive ability and village size.

Suggested Citation

  • Antonia Grohmann & Sahra Sakha, 2015. "The Effect of Peer Observation on Consumption Choices: Experimental Evidence," Discussion Papers of DIW Berlin 1525, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1525
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    1. Fabian Dvorak & Urs Fischbacher & Katrin Schmelz, 2020. "Incentives for Conformity and Anticonformity," TWI Research Paper Series 122, Thurgauer Wirtschaftsinstitut, Universität Konstanz.

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    More about this item

    Keywords

    Consumption; Peer Effects; Conformity;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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