How Competition Shapes Peer Effects: Evidence from a University in China

Abstract Competition is widely used to enhance effort and performance. However, in many domains, like education, competition could backfire, as performance is not solely reliant on individual efforts but also on collaboration endeavors among peers. Utilizing university administrative data, we examine how competition changes peer effects and peer interactions. Exploiting randomly assigned roommates, we first demonstrate that high-ability roommates have detrimental effects on the academic performance of high-ability students. More importantly, such negative peer effects significantly increase along various dimensions of competition intensity within dorm rooms. Follow-up survey findings reveal that competition hinders mutual assistance and fosters unfriendly behaviors among roommates.