Choosing to be Compared: How Comparisons Affect Productivity

Abstract

Many market settings (such as charity fundraising, energy conservation, and health tracking) involve consumers choosing to be compared to their peers, yet many studies in these markets impose forced peer comparisons on participants. I use an experimental design in a controlled laboratory setting to measure if participant choice to receive peer information comparisons affects their subsequent performance on a real-effort task. By randomly moderating the degree of control over information about peers on a real effort task, I find that forced comparison, the condition most akin to real-world settings, leads to marginally worse group performance on average and that the selection ability eliminates this adverse effect of forced comparison on productivity. This is the first causal study to explore this selection channel to improve the efficacy of peer information interventions (PIIs). My results suggest a potential explanation of the demotivational effect of PIIs. I explore potential takeaways and future directions for research.

Keywords: Peer comparisons, effort, social preferences

JEL Classification: D90, D91, C91