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

  • Georganas, Sotiris

    ()

    (Royal Holloway, University of London)

  • Tonin, Mirco

    ()

    (University of Southampton)

  • Vlassopoulos, Michael

    ()

    (University of Southampton)

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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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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  1. 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.
  2. David Gill & Victoria Prowse, 2014. "Gender differences and dynamics in competition: The role of luck," Quantitative Economics, Econometric Society, vol. 5, pages 351-376, 07.
  3. 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.
  4. Ernst Fehr & Lorenz Goette, 2007. "Do Workers Work More if Wages Are High? Evidence from a Randomized Field Experiment," American Economic Review, American Economic Association, vol. 97(1), pages 298-317, March.
  5. Gill, David & Prowse, Victoria L., 2011. "A Novel Computerized Real Effort Task Based on Sliders," IZA Discussion Papers 5801, Institute for the Study of Labor (IZA).
  6. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2013. "Social Networks and Peer Effects at Work," Cahiers de recherche 1320, CIRPEE.
  7. Camerer, Colin, et al, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 407-41, May.
  8. 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.
  9. Tor Eriksson & Anders Poulsen & Marie-Claire Villeval, 2008. "Feedback and Incentives : Experimental Evidence," Working Papers 0812, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  10. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
  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. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
  14. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  15. 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.
  16. Manski, C.F., 1991. "Identification of Endogenous Social Effects: the Reflection Problem," Working papers 9127, Wisconsin Madison - Social Systems.
  17. 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).
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