We provide an explanation for peer pressure in teams based on inequity aversion. Analyzing a two-period model with two agents, we …nd that the e¤ect of inequity aversion strongly depends on the information structure. When contributions are unobservable, agents act as if they were purely sel…sh. However, when contributions are made transparent at an interim stage, agents exert higher e¤orts in the …rst period and adjust their e¤orts according to the interim information in the second period. This form of peer pressure reduces free-riding and thus, more e¢ cient outcomes are attained. The results are con…rmed in a real e¤ort experiment.