The effect of peer observation on consumption choices : experimental evidence

Antonia Grohmann and Sahra Sakha

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.

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Year of publication:	2015
Authors:	Grohmann, Antonia ; Sakha, Sahra
Publisher:	Berlin : DIW
Subject:	Consumption \| Peer Effects \| Conformity \| Soziale Gruppe \| Social group \| Experiment \| Konsumentenverhalten \| Consumer behaviour \| Soziale Beziehungen \| Social relations \| Schätzung \| Estimation \| Privater Konsum \| Private consumption \| Verhaltensökonomik \| Behavioral economics