Effects of peer pressure on endogenous goal setting and performance

• Main Authors: Lim, Wee Meng, Chua, Shannen Qi Shan, Tan, Li Xuan
• Other Authors: Yan Jubo
• Format: Final Year Project
• Language: English
• Published: 2019
• Subjects: DRNTU::Social sciences::Economic theory; DRNTU::Social sciences::Sociology::Social influence
• Online Access: http://hdl.handle.net/10356/76699
• Institution: Nanyang Technological University

We investigate whether peer pressure has effects on endogenous goal setting and performance. Subjects are recruited into an experiment where they have to complete a simple, real effort task where the output is perfectly observable. They are randomly assigned to any of the 3 groups (Control, Screen, Announcement). The presence of comparison to other subjects in the group acts as a form of peer pressure to the subjects. Subjects are paid on a piece rate basis along with a bonus that increases monotonically with their performance when their goals are achieved. This incentivizes subjects to set challenging yet attainable goals that can heighten their performance to their maximum. We have 2 main results. Firstly, we find that the effects of peer pressure on endogenous goals are significant in males. Secondly, we find that individuals whose rankings range from middle to the last place are most likely to be positively affected by peer pressure.