Peer Effects on Undergraduate Business Student Performance

We evaluate the endogenous peer influence of students in one U.S. public University College of Business. In particular, we measure the peer effect on student grades. This study utilises an exclusion restriction approach similar to De Giorgi et al. (2010) to estimate the endogenous peer effect. Our results support the finding that a student's classroom performance has a significant effect on their peers. Overall, our results suggest a negative peer effect. However, we find that the direction and magnitude of the peer effect is sensitive to the student's own average ability and that of their peers.