Peers and productivity: Evidence from an experimental factory

Reyniers, Diane (2018): Peers and productivity: Evidence from an experimental factory.

Abstract

Workplace peer effects are well documented, but why they arise remains a puzzle. This paper investigates the issue experimentally. Subjects are brought together to perform a real-effort task in a simulated factory environment. Varying the returns to effort by altering free-riding incentives or piece rates does not affect productivity but psychological factors do matter. Even though there are no technological complementarities, co-workers’ productivity levels are highly correlated. Three psychological mechanisms which can generate these correlations are examined: (a) workers’ desire to conform to a work norm, (b) inequity aversion and (c) concern about relative performance. Subjects’ enjoyment of the task depends on their relative performance and not on how close their productivity is to the norm or on the inequity of outcomes. This finding suggests that peer effects arise because of intrinsic competitiveness. Subjects hate to do worse than their co-workers and love to do better.

• Item Type: MPRA Paper
• Language: English
• Keywords: Peer Effects, Job satisfaction, Relative Performance Concerns, Social Norms
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior; D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity

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