Under (peer) pressure: Experimental evidence on team size and task performance

Causal evidence for the effect of team size on performance is lacking despite high relevance this question. From an economic perspective, one would expect incentives to decrease with increasing size, but psychological phenomenon peer effects could mitigate free-rider problem. To analyze behavioral implications due changes in we exploit a rich dataset from controlled experiment teams either two or three participants university research project performing real-effort task. Our study provides main findings. First, does not change average, which robust result, be it across dimensions and even when introducing pay inequality between work periods. Second, positive spillovers alleviate problem increases. Third, pressure transparency others' explain variation size. In contrast discussions previous literature, our points potentially negative role performance. While lower allows more spillovers, high-skilled seems other member produce mistakes instead output quality.