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In the year following a reunion, section peers are around 15% more similar than class peers and the implied elasticity is 30%. Equality in the distance ratio in the year after reunions compared to other years can be rejected at the ten percent level for all outcomes except total compensation. Altogether, tests using alumni relations seem to show that peer effects in compensation and acquisition are driven by contemporaneous interactions. Pay for friends luck tests show that section peers are 6-10% more similar than class peers even when the peers compensation is due to lucky shocks in his industry.
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Return to [[BPP Field Exam Papers 2012]]
He finds strong evidence of peer effects in executive compensation and acquisitions. Under the linear in means model he estimates a lower bound of elasticity of individual outcomes of 10%-20%.
===How might the tests be improved upon===
I am slightly worried about the exogenous nature of reunions. Reunions occur every 5 years, and while its likely that peers do not keep in touch outside of the reunion, I am worried about some other sort of convergence effect. Perhaps, executives keep fairly close tabs on their close friends who are from their section group, and if they have less acquisitions or something work to make this up in the lead up to a reunion, so its not so much the reunion as the mechanism, as a keeping up with the Johnson's effect.
===What is an alternate empirical strategy===
