In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers' observable characteristics. We also find that referrals perform particularly well when working directly with their referrers.
Full Answer
Do referred workers perform better when working directly with their referrers?
In particular, referred workers per-formed much better when working with their own referrer than with arandomly selected referrer they did not know.
Do referrals contain information?
The above analysis suggests that referrals contain information. Here, wefind that some referrals contain more information than others. In partic-ular, referrals made by high-performing referrers and referrals of work-ers with strong ties to their referrers are particularly informative.Using data from the peer influence experiment, column 1 of table 3shows that a referrer’s performance is a strong predictor of her referral’sperformance. This is not just a result of the referrer and her referral fac-ing common shocks. The referrer’s performance in the peer influenceexperiment is a strong predictor of her referral’s performance in the se-lection experiment 4 months later (col. 2, table 3).
Published Versions
Amanda Pallais & Emily Glassberg Sands, 2016. " Why the Referential Treatment? Evidence from Field Experiments on Referrals, " Journal of Political Economy, vol 124 (6), pages 1793-1828.
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