Where Do I Belong? Prospective Relative Performance Information under High- and Low-Performing Reference Groups

ABSTRACT We present two experiments on the behavioral effects of prospective relative performance information (RPI) when facing multiple reference groups that differ in their implicit performance standard. In Study 1, employees are exogenously assigned to either a high- or low-standard reference group. Our results suggest that employees generally seek to enhance their sense of belonging by conforming to the standard. However, RPI boosts the performance of high-performers assigned to the low-standard group, whereas low-performers assigned to the high-standard group show decreased performance. This indicates that RPI may reinforce a sense of not belonging. In Study 2, where employees self-select their reference group, our results suggest that they generally sort themselves according to their sense of belonging. Anticipating RPI, however, can induce employees to select the high-standard group as a self-set target, spurring motivation. Overall, our studies shed more light on the costs and benefits of RPI and self-selection options. Data Availability: The full experimental instrument and data are available from the authors upon request. JEL Classifications: C91; D91; M41; M54.