The importance of relative performance feedback information: Evidence from a natural experiment using high school students

Abstract

We study the effect of providing relative performance feedback information on performance under piece-rate incentives. A natural experiment that took place in a high school offers an unusual opportunity to test this effect in a real-effort setting. For one year only, students received information that allowed them to know whether they were above (below) the class average as well as the distance from this average. We exploit a rich panel data set and find that the provision of this information led to an increase of 5% in students' grades. Moreover, the effect was significant for the whole distribution. However, once the information was removed the effect disappeared. To rule out the concern that the effect may be driven by teachers within the school, we verify our results using national level exams (externally graded) for the same students, and the effect remains.

Intermediate Information, Loss Aversion, and Effort: Empirical Evidence

“…The greater the observed differences in effort, however, the smaller the impact on second‐stage effort. Azmat and Iriberri () rely on data from a natural experiment in a high school to investigate whether feedback information about relative performance affects students' behavior. They find that students' grades increase significantly after they receive feedback information, especially among high‐ability students.…”

The Role of Goals and Feedback in Incentivizing Performance

“…Azmat and Iriberri (), in an educational natural experiment, find that the provision of relative performance feedback enhanced performance by 5% for the whole distribution. Falk and Ichino () observe a very clear positive peer effect on worker performance under a fixed payment scheme.…”

On structural change, the social stress of a farming population, and the political economy of farm support

“…Maslow () views status as a basic human need, and Huberman et al . (, p. 103) infer from a study of five societies that “subjects valued status independently of any monetary consequence.” There is considerable evidence from research in modern economics showing that the desire to escape low rank motivates workers to exert more effort (Neckermann and Frey, ; Kuhnen and Tymula, ; Duffy and Kornienko, ; Kosfeld and Neckermann, ) and students to perform better (Bandiera et al ., ; Azmat and Iriberri, ). A “problem” with this body of work is that, essentially, it points to an ordinal measure of relative deprivation, namely concern about having low rank.…”