If individuals tend to behave like their peers, is it because of conformity, that is, the preference of people to align behavior with the behavior of their peers; homophily, that is, the tendency of people to bond with similar others; or both? We address this question in the context of an ethical dilemma. Using a peer effect model allowing for homophily, we designed a real-effort laboratory experiment in which individuals could misreport their performance to earn more. Our results reveal a preference for conformity and for homophily in the selection of peers, but only among participants who were cheating in isolation. The size of peer effects is similar when identical peers were randomly assigned and when they were selected by individuals. We thus jointly reject the presence of a self-selection bias in the peer effect estimates and of a link strength effect.
Liza Charroin: University of Paris 1.
Bernard Fortin: Laval University, CIRPÉE, CIRANO, IZA.
Marie Claire Villeval: Univ Lyon, IZA.
We thank Vincent Boucher, Yann Bramoullé, Yan Chen, Alain Cohn, Russell Davidson, Claude Fluet, Steeve Marchand and Bruce Shearer for helpful discussions. We also thank seminar participants at Aix Marseille School of Economics, Beta at Université de Lorraine, CREST in Paris, the Erasmus Institute in Rotterdam, ICES at George Mason University, Laval University, the University of Michigan SBEE seminar, Purdue University, Shandong University, the Universities of Glasgow and Heidelberg, and Virginia Tech University for helpful comments. Aristide Houndetoungan provided exceptional research assistance. We are also grateful to uentin Thevenet who programmed the experiment. Support for this research was provided by the French National Research Agency (FELIS, ANR-14-CE28-0010-01), the CORTEX Laboratory of Excellence (ANR-11-LABX-0042) of Université de Lyon, within the program Investissements d’Avenir (ANR-11-IDEX-007), and IDEXLYON from Université de Lyon (INDEPTH-IDEX/SBP/2018/03) within the Programme Investissements d’Avenir (ANR-16-IDEX-0005) operated by the French National Research Agency.