Quitting and Peer Effects at Work

This paper studies the influence of peers on the extensive margin of effort at work by means of a real-effort experiment in which subjects have to decide on the intensity of effort and when to stop working. Participants perform a task alone or in the presence of a peer. The feedback on the co-worker's output is manipulated and we vary whether the two workers can communicate. We find that when communication is allowed, the average productivity per unit of time and the quitting time are not increased but the presence of a peer causes workers to stay longer and to quit at more similar times. Peer effects on the extensive margin of effort derive more from a sociability effect, i.e. a reduction of the social distance between co-workers that could make the other's presence more valuable, than from performance or quitting time comparisons.