Two Functions of Peer Influence on Upper

Peers have a paradoxical influence on each other’s educational decisions. On one hand, students are prone to conform to each other’s ambitious educational decisions and, on the other hand, are discouraged from ambitious decisions when surrounded by successful peers. In this study I examine how peers influence each other’s decision to apply to an academic track in upper-secondary education through these two functions of peer influence. The results show that students are more likely to conform to their in-group peers. However, discouraging effects are structured differently, whereby expectations about self- and peer achievement seem to be a mediating factor. This suggests that the point of reference varies with the mechanism mediating interpersonal influence together with characteristics of both peers and egos. The analysis benefits from rich population registers covering 13 full cohorts of Swedish students, facilitating controls for several sources of endogeneity, such as unobserved time-constant school and family effects