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

  • Georganas, Sotiris


    (Royal Holloway, University of London)

  • Tonin, Mirco


    (Free University of Bozen/Bolzano)

  • 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:
Publication status: published in: Journal of Economic Behavior and Organization, 2015, 117, 223-232.
Handle: RePEc:iza:izadps:dp7523
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References listed on IDEAS
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  1. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  2. Julie Beugnot & Bernard Fortin & Guy Lacroix & Marie Claire Villeval, 2014. "Social network and peer effects at work," Post-Print halshs-00949157, HAL.
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  4. Gill, David & Prowse, Victoria, 2011. "A novel computerized real effort task based on sliders," Discussion Paper Series In Economics And Econometrics 1101, Economics Division, School of Social Sciences, University of Southampton.
  5. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
  6. 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.
  7. Josse Delfgaauw & Robert Dur & Joeri Sol & Willem Verbeke, 2009. "Tournament Incentives in the Field: Gender Differences in the Workplace," Tinbergen Institute Discussion Papers 09-069/1, Tinbergen Institute, revised 20 Apr 2012.
  8. 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.
  9. Armin Falk & Andrea Ichino, 2004. "Clean Evidence on Peer Effects," Levine's Bibliography 666156000000000439, UCLA Department of Economics.
  10. Eriksson, Tor & Poulsen, Anders & Villeval, Marie Claire, 2008. "Feedback and Incentives: Experimental Evidence," IZA Discussion Papers 3440, Institute for the Study of Labor (IZA).
  11. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-45, March.
  12. Fabian Waldinger, 2009. "Peer effects in science: evidence from the dismissal of scientists in Nazi Germany," LSE Research Online Documents on Economics 28518, London School of Economics and Political Science, LSE Library.
  13. 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.
  14. Jordi Blanes i Vidal & Mareike Nossol, 2011. "Tournaments Without Prizes: Evidence from Personnel Records," Management Science, INFORMS, vol. 57(10), pages 1721-1736, October.
  15. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  16. 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.
  17. repec:oup:qjecon:v:112:y:1997:i:2:p:407-41 is not listed on IDEAS
  18. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
  19. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2005. "Large stakes and big mistakes," Working Papers 05-11, Federal Reserve Bank of Boston.
  20. Babcock, Philip & Bedard, Kelly & Charness, Gary & Hartman, John & Royer, Heather, 2012. "Letting Down the Team? Social Effects of Team Incentives," University of California at Santa Barbara, Economics Working Paper Series qt93n646db, Department of Economics, UC Santa Barbara.
  21. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-17, August.
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  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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