Peers shape perceptions of social norms as well as individual moral behavior.  These influences can be direct, with increased pressure to conform due to the social and emotional proximity of peers as well as the material interests and strategic motivations involved in interacting with them. In addition to these direct effects, the information received via the observation of peers can indirectly influence moral behavior by allowing inferences about the prevalence of social norm compliance and social preferences in one's environment.

Conforming with peers in honesty and cooperation by Ozan Isler and Simon Gaecther is a NIBS1 paper which discusses the potential of, and difficulties in, using peer observation to influence social norm compliance as an avenue for further research and as a tool to promote social welfare.  Participants in an experiment complete two independent tasks involving peer observation, one about honesty and another about cooperation. Results suggest that the directed use of individual peer information can be welfare enhancing in both honesty and cooperation.

Published in the Journal of Economic Behavior & Organization, Volume 195, March 2022, Pages 75-86 - available online.