Peer Effects in Subjective Performance Evaluation

We investigate the influence of peer quality on subjective performance evaluation using 64,886 ratings of 95 employees from 6,741 raters in an organizational setting. Consistent with contrast effects being prevalent in settings of high field similarity, we find that subjective performance ratings are lower for employees with higher quality peer groups in both randomized and non-randomized settings. We find that peer employees experienced by raters in previous periods also influence subjective ratings and that these peer effects can persist for several months. We predict and find that the strength of peer effects is greater for those peers with higher task comparability. In subsequent analysis, we find contrast effects remain even when priming raters with the employees’ previous performance. Overall, we find strong and persistent peer effects in subjective employee ratings.