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

Sotiris Georganas, Mirco Tonin and Michael Vlassopoulos ()

No 7523, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: team incentives; piece rate; peer effects; real-effort experiment (search for similar items in EconPapers)
JEL-codes: D03 J24 M52 M59 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-exp, nep-hrm, nep-lab, nep-lma, nep-ore, nep-ppm, nep-soc, nep-spo and nep-ure
Date: 2013-07
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Published in: Journal of Economic Behavior and Organization, 2015, 117, 223-232.

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Related works:
Journal Article: Peer pressure and productivity: The role of observing and being observed (2015) Downloads
Working Paper: Peer Pressure and Productivity: The Role of Observing and Being Observed (2014) Downloads
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