Peer Effects Under Different Relative Performance Feedback and Grouping Procedures

30 Pages Posted: 20 Jun 2017 Last revised: 29 Jul 2019

See all articles by Kathrin Thiemann

Kathrin Thiemann

University of Hamburg - Department of Economics

Niklas Wallmeier

University of Hamburg

Date Written: July 26, 2019

Abstract

We conduct a laboratory experiment to test theoretical predictions about subjects' performance in an effort task conditional on their peer group's composition and relative performance feedback. Subjects are grouped either randomly or according to their ability, with the feedback being the best or average performance of their group. While theory-derived hypotheses on aggregate treatment differences cannot be confirmed, we find evidence when gender differences are taken into account. Male subjects perform significantly better when they compare themselves with the best peer instead of the average, while the opposite is true for females. With respect to the grouping treatment, we find that random grouping is beneficial for male subjects, and ability grouping for female subjects. These differences are explained by gender differences in (non-linear) reactions to the reference point and an aversion of females to competitive environments.

Keywords: Laboratory Experiment, Ability Grouping, Relative Performance Feedback, Peer Effects, Reference Dependent Preferences

JEL Classification: C91, J16, J24, M52

Suggested Citation

Thiemann, Kathrin and Wallmeier, Niklas, Peer Effects Under Different Relative Performance Feedback and Grouping Procedures (July 26, 2019). Available at SSRN: https://ssrn.com/abstract=2988808 or http://dx.doi.org/10.2139/ssrn.2988808

Kathrin Thiemann

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

Niklas Wallmeier (Contact Author)

University of Hamburg ( email )

Von-Melle-Park 5
Hamburg, 20146
Germany

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