Peer Effects

Question 1

What are the issues with the regression yi = a + Bxi + gamma xg + delta yg

Answer 1

• Reflection issues were there is reverse causality in the equation. you cannot determine whether the group or individual behaviours impact each other in either way.
• Correlated shocks cause issues to our estimates.
• Regressing yi on xg doesnt give the true effect due to feedback between the group and the individual.

Question 2

Falk and Ichino (2006) = what is the setting of the paper? What is the primary question and identifying strategy?

Answer 2

Simple tasks of folding letters into envelopes. Employees are paid a fixed salary for the work.
Treatment of workers is done by t=1 placing workers in the same room together.
-The idea is how does peer effects affect productivity.
-The tasks are strictly individual and no knowledge spillovers can occur.

Question 3

Falk and Ichino 2006 = what are the main results?

Answer 3

• Peer presence reduced pairs output disperison
• Peer presence increases average output (16%)
• Strongest effects are with the lowest productivity workers (30%)

Question 4

Mas and Moretti (2009) = What is the setting, what is the strategy of the paper?

Answer 4

Supermarket cashiers and how an individual entering a quasi-team environment will impact individual productivity and the average group output.

Question 5

Mas and Moretti (2009) = What are the results of the paper?

Answer 5

-As Average speed increases by 1 item/minute, the individual speed increases by 0.15 items/minute.
-if an above average cashier enters the group; average productivity increases by 1%
-if a below average enter; decrease by 0.5%

Question 6

Mas and Moretti 2009 = what are the effects of spatial orientation in this paper? What issues arise with the paper?

Answer 6

-Being able to observe other cashiers work is the only way to experience peer effects in this context.
- OVB maybe present as fast workers may work peak hours for example.

Question 7

Bandiera et al (2010) = what is the main idea of the paper?

Answer 7

Workers picking fruit in the UK.
-P4P and strictly individual work.
-Testing whether working with friends (of different qualities) impacts performance

Question 8

Bandiera et al (2010) = What are the results of the paper?

Answer 8

-No average effect of working with friends
-Large heterogeneity where working with good friends will increase productivity and working with bad friends will reduce it.
-indicates socialisation tendencies where friends will reduce effort to remain physically close to each other.