Identifying and decomposing peer effects on decision-making using a randomized controlled trial

Abstract

Utilizing a randomized controlled trial (RCT) in traditional clusters of apparel and textile firms in Vietnam, this paper investigates peer effects on firm managers’ decisions to participate in seminars on export promotion. We invited 131 randomly selected firm representatives to three one-day seminars on export promotion. We use the number of randomly invited peers to identify peer effects. We further decompose the invited peers into peers invited to the same seminar, those invited to the earlier seminars, and those invited to the later seminars. We find that the former has a positive effect on firms' participation, whereas the latter two have no significant effect. These results imply that peer effects on participation primarily arise from the benefits of face-to-face interactions. The presence of positive peer effects suggests that multiple equilibria in terms of the share of participants within each village of firms may emerge, which is also consistent with our observations.