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
performing 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 artificially driven by teachers within the
school, we verify our results using national level exams (externally graded) for the same
students, and the effect remains.
Keywords: school performance, relative performance, piece-rate, feedback, natural experiment, social comparison, self-perception, competitive preferences.
JEL classification: I21, M52, C30.