In Simple Words
Imagine a witness in court who is tempted to lie to protect a friend, but is offered a small reward if testimony matches verifiable facts. By offering peer evaluators a modest financial bonus tied to the objective accuracy of predictions, evaluators weigh the immediate cash reward for honesty against the social temptation to favor friends, restoring truthful information flow.
Amravati peer groups, rankings affected grants
- Flat survey payment
- Comparison accuracy
- Payment rewarded accuracy
- More than twice the accuracy
High-stakes reporting stratum, pooling public/private reporting. Paying for accuracy improved reporting by over 100% relative to flat payment; absolute accuracy is not provided.
See source →Research question
Community peer evaluations suffer from strategic misreporting when participants attempt to direct resources toward family and friends. Without an explicit counter-incentive for accuracy, social ties dominate survey responses, preventing lenders from acquiring honest information.
Participants
1,345 households in 274 peer groups of five microentrepreneurs in Amravati, Maharashtra, India.
Study Design
Randomized evaluation assigning peer groups to receive accuracy-calibrated compensation of INR 100 (US$1.70, equivalent to two-thirds of average daily wage) versus a lump-sum compensation regardless of accuracy.
Results
Small monetary payments for accuracy doubled reporting accuracy under no-stakes conditions and improved reporting accuracy by over 100% under high-stakes conditions at an added cost of only INR 40 (US$0.70) per loan.
Takeaway
Offer microentrepreneurs small, accuracy-calibrated monetary incentives when completing peer evaluation surveys to ensure truthful data collection.