published in: Journal of Labor Economics, 2006, 24 (1), 39-57
While confounding factors typically jeopardize the possibility to use observational data to
measure peer effects, field experiments offer the possibility to obtain clean evidence. In this
paper we measure the output of four randomly selected groups of individuals who were
asked to fill letters in envelopes, with a remuneration completely independent of output. For
two of these groups the output of peers was exogenously manipulated (low or high) by
making individuals aware of the number of letters previously produced by artificial colleagues.
In the third group individuals were set up to work one in front of the other, while the fourth
group gave the baseline output for independent not manipulated work. Our first finding is that
effort of the less productive workers reacts in a sizeable and statistically significant way to
peer pressure. Second, there is strong evidence of peer effects when individuals work in
pairs. Third, these peer effects work in the direction of making the least productive individuals
work harder, thereby increasing overall productivity.
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