and Northwestern for their comments. We also thank Daniel Levinthal and three anonymous reviewers for encouraging up to consider the effects technology markets in our model.

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In retail management, one of the fundamental and critical decisions for managers is how to motivate, staff, and organize their sales force. This task becomes more challenging when employees work in teams so that their productivity will be influenced by peers. Recent work empirically demonstrates peer effects in single-firm work settings under one compensation structure, but these studies leave important questions unanswered. We use a three-year dataset of Chinese cosmetic sales transactions to examine how compensation and firm boundaries influence worker productivity spillovers and sales strategies. We demonstrate three important new sets of findings. First, while high-ability workers under the team-based compensation system significantly improve the sales productivity of their peers, under individual-based compensation they have a strong negative effect on peers while gaining little in the process. Second, we find that peer effects exist across firm boundaries, with workers at team-based compensation counters more capable in competing against peers at other counters. Third, when faced with high-ability peers, workers under individual-based compensation respond by strategically discounting prices offered to customers and focusing on retaining high-value customers who may be more brand loyal. Our results suggest that while heterogeneity in worker productivity enhances total team performance under team-based compensation, it impacts firms with individual-based compensation negatively. This paper provides a unique contribution to the literature by being the first to simultaneously estimate peer productivity spillovers both within and across firms under multiple compensation systems. It is also the first identifying how workers respond to peer effects with discretionary strategies, and provides important implications for managerial decisions on staffing, compensation, and pricing discretion. Finally, the paper implements an improved methodology that generates more efficient estimators than those in previous studies.

We study how peers impact worker productivity growth among salespeople in the cosmetics department of a department store. We first exploit a shift assignment policy that creates exogenous variation in salespersons' peers each week to identify and quantify sources of worker learning. We find that peer-based learning is more important than learning-by-doing for individuals, and find no evidence of forgetting. Working with high-ability peers substantially increases the long-term productivity growth of new salespeople. We then examine possible mechanisms behind peer-based learning by exploiting the multiple collocated firms in our setting that sell products with different task difficulties, and compensate their sales force using either team-based or individual-based compensation systems. The variation in incentives to compete and cooperate within and across firm boundaries, combined with variation in sales difficulty for different product classes, allows us to suggest two mechanisms behind peer-based learning: observing successful sales techniques of peers and direct teaching. Our paper advocates the importance of learning from one another in the workplace, and suggests that individual peer-based learning is a foundation of both organizational learning curves and knowledge spillovers across firms.

The authors model how to measure consumer willingness to pay (WTP) from an English or ascending first-price auction based on two general bidding premises: no bidder bids more than her WTP, and no bidder allows a rival bidder to win at a price that she is willing to beat (Haile and Tamer 2003). In other words, a "no regret" rule in bidding is proposed. Other than that, no other restrictive assumptions on maximands or behavior of bidders in a competitive auction context are imposed. WTP is modeled as having two components: a pure product feature component and one based on the auction market environment. The latter includes bidder experience, seller reputation, and measures for competition among bidders and among items. The proposed model is general enough to include "buy it now" (BIN) (equivalent to a posted price) auction mechanism.The authors use data of notebook auctions from one of the largest Internet auction sites in Korea. They find that most product characteristics matter in the expected ways. Other primary findings are as follows: (1) WTP declines as more similar items are concurrently listed with the focal item; there is an additional effect if these similar items also belong to the same brand. Therefore, market thickness matters for consumer WTP. (2) More extensive site-surfing and bidding histories lead to lower WTP, implying that search costs and experience matter in bidding. As specific substantive benefits, the authors demonstrate how sellers can calculate changes in WTP, and hence the expected revenue, as the number of concurrently available similar items varies.Key words: internet auctions, bidder willingness-to-pay, bidder competition, item competition, econometric models.Auctions on the Internet are a booming enterprise. From a managerial perspective, two recent trends are worth noting. First, the Internet auction market appears to have matured enough that managers are beginning to ask whether auction data can be used to estimate consumer valuations for various products. As a recent report indicated, "For years, eBay Inc. has let its users buy and sell almost anything. Now it wants to become the blue book for just about everything … Recently, eBay stepped up the program with two deals that show how the San Jose, Calif., company's data could end up as the basis for guides used to determine fair market prices for items that may never be purchased or sold on the site itself … eBay is making the push at a time with its site has grown monstrously large, with enough auctions of items across various categories that the company says it can provide representative market prices" (Wall Street Journal, December 8, 2003). Second, there is a growing interest in understanding the impact of competition among auction items on bidder behavior. These two managerial concerns form the core research questions of our paper.In measuring consumer valuations from auction data, there are three major issues to be resolved: (1) How to separate out the impact of auction market environment from pure productbased con...