Peer Effects in Risk Taking

This paper examines the effect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer effects. We test for two main channels: utility from payoff differences and from conforming to the peer. We show experimentally that social utility generates substantial peer effects in risk taking. These are mainly explained by utility from payoff differences, in line with outcomebased social preferences. Contrary to standard assumptions, we show that estimated social preference parameters change significantly when peers make active choices, compared to when lotteries are randomly assigned to them

How Peer Effects Influence Energy Consumption

This paper analyzes the impact of peer effects on electricity consumption of a network of rational, utility-maximizing users. Users derive utility from consuming electricity as well as consuming less energy than their neighbors. However, a disutility is incurred for consuming more than their neighbors. To maximize the profit of the load-serving entity that provides electricity to such users, we develop a two-stage game-theoretic model, where the entity sets the prices in the first stage. In the second stage, consumers decide on their demand in response to the observed price set in the first stage so as to maximize their utility. To this end, we derive theoretical statements under which such peer effects reduce aggregate user consumption. Further, we obtain expressions for the resulting electricity consumption and profit of the load serving entity for the case of perfect price discrimination and a single price under complete information, and approximations under incomplete information. Simulations suggest that exposing only a selected subset of all users to peer effects maximizes the entity's profit.Comment: 9 pages, 4 figure

Peer Effects in Austrian Schools

This study deals with educational production in Austria and is focused on the potential impact of schoolmates on students’ academic outcomes. We used PISA 2000 data to estimate peer effects for 15 and 16 year old students. The estimations yield substantial positive effects of the peer groups’ socioeconomic composition on student achievement. Furthermore, quantile regressions suggest peer effects to be asymmetric in favor of low-ability students, meaning that students with lower skills benefit more from being exposed to clever peers, whereas those with higher skills do not seem to be affected much. Social heterogeneity, moreover, has no big adverse effect on academic outcomes. These results imply considerable social gains of reducing stratification in educational settings.Peer effects, Education, PISA data

The impact of peer ability and heterogeneity on student achievement: Evidence from a natural experiment

This paper estimates the impact of peer achievement and variance on math achievement growth. It exploits exogenous variation in peer characteristics generated at the transition to upper-secondary school in a sample of Berlin fifth graders. Parents and schools are barely able to condition their decisions on peer characteristics since classes are newly built up from a large pool of elementary school pupils. I find positive peer effects on achievement growth and no effects for peer variance. Lower-achieving pupils benefit more from abler peers. Results from simulations suggest that pupils are slightly better off in comprehensive than in ability-tracked school systems. --peer effects in secondary school,comparison between ability-tracked and comprehensive school,natural experiment

Peer Effects in Higher Education

In this chapter, we describe the potential significance of student peer effects for the economic structure of and behavior in higher education. Their existence would motivate much of the restricted supply, student queuing, and selectivity and institutional competition via merit aid and honors colleges that we see in American higher education; their (appropriate) non-linearity could justify the resulting stratification of higher education as an efficient way to produce human capital. In addition, we use data from the College and Beyond entering class of 1989, combined with phonebook data identifying roommates, to implement a quasi-experimental empirical strategy aimed at measuring peer effects in academic outcomes. In particular, we use data on individual students' grades, SAT scores, and the SAT scores of their roommates at three schools to estimate the effect of roommates' academic characteristics on an individual's grades. The results suggest that, for two of the three schools used, students in the middle of the SAT distribution do somewhat worse in terms of grades if they share a room with a student who is in the bottom 15 percent of the SAT distribution. Students in the top of the SAT distribution appear often not to be affected by the SAT scores of their roommates. These results are similar to those reported in earlier research using data from Williams (Zimmerman) and Dartmouth (Sacerdote).

Do Peers Affect Student Achievement? Evidence from Canada Using Group Size Variation

We provide the first empirical application of a new approach proposed by Lee (2007) to estimate peer effects in a linear-in-means model. This approach allows to control for group-level unobservables and to solve the reflection problem. We investigate peer effects in student achievement in Mathematics, Science, French and History in Quebec secondary schools. We estimate the model using maximum likelihood and instrumental variables methods. We find evidence of peer effects. The endogenous peer effect is positive, when significant, and some contextual peer effects matter. Using calibrated Monte Carlo simulations, we find that high dispersion in group sizes helps with potential issues of weak identification.reflection problem, student achievement, peer effects