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Peer pressure and social comparisons with heterogeneous ability

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  • Aurélie Bonein

Abstract

When workers' efforts are not contractible, we investigate whether the display of workers' efforts to coworkers influences wage and effort decisions. We find that employers mainly increase the wages offered to the more valuable workers when they are observed that increases the difference in wages in such setting. We find evidence of peer pressure and strategic complementarity in efforts. Additionally, low†ability workers are more sensitive to peer pressure than their more productive coworkers, and these workers exert less effort with increases in the reciprocity of their coworkers. Finally, the display of workers' efforts to coworkers is detrimental to the employer's payoff but enhances efficiency.

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  • Aurélie Bonein, 2018. "Peer pressure and social comparisons with heterogeneous ability," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 39(2), pages 142-157, March.
    • Handle: RePEc:wly:mgtdec:v:39:y:2018:i:2:p:142-157
    DOI: 10.1002/mde.2876
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    Cited by:

    1. Becker, Johannes & Hopp, Daniel & Süß, Karolin, 2020. "How altruistic is indirect reciprocity? - Evidence from gift-exchange games in the lab," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224592, Verein für Socialpolitik / German Economic Association.
    2. Hopp, Daniel & Süß, Karolin, 2024. "How altruistic is indirect reciprocity? — Evidence from gift-exchange games in the lab," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).

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