Abstract
In a randomized field experiment, we give first-year students in higher education feedback on their relative performance and show that the type of feedback matters, as feedback increases performance only if it informs the student that they placed above average in the past. We reproduce the results in a replication experiment and investigate mechanisms: The effects are not driven by above-average students reacting particularly well to feedback due to individual characteristics; rather, the information about being above average makes feedback effective. We present evidence that individuals focus on good news to adjust their beliefs, and that feedback can offset disadvantages faced by individuals who are held back by their own underestimation of relative abilities. Once beliefs between controls and the treated converge, repeated treatment does not add to the effects.
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