Joint-Liability vs. Individual Incentives in the Classroom. Lessons from a Field Experiment with Undergraduate Students

We evaluate the impact of joint-liability incentives in the classroom using a randomized field experiment. The instructor designs groups of three students in the classroom and provides a premium to their homework's grade only if all three members of the group meet some requirements. To isolate the joint-liability effect from selfish motivations, we also design an individual incentives treatment. We find that joint-liability incentives impact positively on the grades attained in homework and midterm exams both in experimental courses and in other courses taken by the students in the semester. Though the average positive effect seems to disappear in final exams, the overall impact of joint-liability incentives on the academic achievements in the semester is still positive. A drawback of this program is a decrease in classmate satisfaction. The significant effectiveness of the peer monitoring developed by jointliability incentives in a group provides novel implications for the design of grading policies in the classroom and for other social settings where incentives may be based in peer monitoring or joint liability. JEL: I20, I23