The Effect of Peer Observation on Consumption Choices: Experimental Evidence

59 Pages Posted: 2 Dec 2015

See all articles by Antonia Grohmann

Antonia Grohmann

Aarhus University

Sahra Sakha

Deutsche Bundesbank; German Institute of Economic Research

Multiple version iconThere are 3 versions of this paper

Date Written: November 24, 2015

Abstract

This paper investigates the impact of peer observation on the consumption decisions of rural households in Thailand using a lab-in-the-field experiment. We find that those groups that observe each other show lower within Group standard deviation in their decisions. Thus, we find evidence for conformity. Further, we find that individual's consumption choice is influenced by the group choice controlling for large number of individual, household, and village characteristics. We find that unfamiliarity of the product is counteracted by peer effects. Finally, we find evidence of treatment heterogeneity with regards to cognitive ability and village size.

Keywords: Consumption, Peer Effects, Conformity

JEL Classification: D12, C21, C92

Suggested Citation

Grohmann, Antonia and Sakha, Sahra, The Effect of Peer Observation on Consumption Choices: Experimental Evidence (November 24, 2015). DIW Berlin Discussion Paper No. 1525, Available at SSRN: https://ssrn.com/abstract=2697563 or http://dx.doi.org/10.2139/ssrn.2697563

Antonia Grohmann

Aarhus University ( email )

Nordre Ringgade 1
DK-8000 Aarhus C, 8000
Denmark

Sahra Sakha (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Strasse 14
Frankfurt/Main D-60431
Germany

German Institute of Economic Research ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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