While it is generally believed that pressure from peers induces employees to improve their efficiency and performance, little is known about whether employees' improved performance is detrimental to the interests of others. Based on a granular dataset at the individual-month level of investment advisors' and customers’ accounts from a large retail bank in China, we find that peer pressure, as measured by the performance of advisors relative to their colleagues in the previous month, can induce the advisors to sell more financial products, but can also exacerbate misselling, resulting in a significant increase in sales of poor-quality financial products ("high-risk-low-return" products). The causal link is identified with an exogenous change of peer size. The peer pressure effects are pronounced among poor performance advisors, and client complaints play a monitoring role in curbing misselling. By exploring the correspondence between advisors and clients, we find that misselling occurs mainly between female advisors and male clients, and between advisors who lack work experience and clients who lack investment experience.

Utilizing a unique P2P dataset, this study employs the PSM-DID method to explore the learning effect brought about by default events on investors. The findings reveal that investors who experience their first default event demonstrate an improved ability to select a higher-quality project the next time. Notably, this positive effect is more pronounced when facing substantial defaults, as opposed to cases where overdue principal and interest are eventually settled. Investors' initial confidence in defaulted projects contributes to a greater enhancement of their investment skills. Furthermore, the beneficial impacts of defaulted events diminish as investors’ investment experience accumulates.

Based on detailed trade records of individual investors who participated in both China’s A- and B- share markets, we find investors are more likely to buy A (B) shares when the A-share premium is lower (higher), when they have already held the same firm’s A (B) shares and when they have previously traded the same firm’s A (B) shares. Given that the correlation between the same firm’s A and B shares is below 70% and that A shares are more expensive, it is sensible for investors to invest more into the B shares. Our evidence suggests that investors accept a less than optimal portfolio due to lack of investment experience.