university of zurich

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 subjects who were asked to fill letters into envelopes, with a remuneration completely independent of output. We study two treat-ments. In the “pair ” treatment two subjects work at the same time in the same room. In this situation peer pressure is possible and implies that outputs within pairs should be similar. In the “single ” treat-ment, which serves as a control, subjects work alone in a room and peer pressure is ruled out by design. Our main results are as follows: First, we find clear and unambiguous evidence for the existence of peer pressure in the pair treatment. The standard deviations of output are significantly smaller within pairs than between pairs. Second, average output in the pair treatment largely exceeds output in the single treat-ment, i.e., peer pressure raises productivity. Third, low productivity workers are significantly more sensitive to the behavior of peers than high productivity workers. Our findings yield important implications for the organization of the workplace