Peer Effects in Subjective Performance Evaluation

The authors investigate the influence of peer quality on subjective performance evaluation using 75,413 ratings of 130 employees from 6,908 raters in a business school setting. The authors find that subjective performance ratings are lower for employees with higher quality peer groups in both randomized and nonrandomized settings. Using a novel long-window setting, the authors observe peer effects persisting, but slowly decaying, for several months even when priming raters with the employees’ previous performance information. The authors find that the strength of the peer effects is greater for focal employees with weaker performance, for the peers with higher attribute similarity, and when the performance of peers is more extreme. Overall, the authors find strong and persistent peer effects in subjective performance evaluation.