In a population of undergraduate students, we examined the impact of reciprocal peer monitoring of educational behaviors on academic performance. Reciprocal peer monitoring is a novel design of incentives that promotes peer-observing and checking the behavior of others. To distinguish the pure effect of peer monitoring from self-motivation, we also examined the effects of individual incentives on academic performance. Using a randomized controlled trial, this study showed that a joint-liability incentives arrangement was more effective than the individual incentives approach to increase students’ academic performance. The results also showed that participants reported negative views of aspects of the joint-liability incentives intervention. The current procedures entailed a novel system of incentives for students that does not require tangible reinforcers and requires them to exert more effort to succeed in a course. These procedures may be characterized as an innovative insight for the design of grading policies in the classroom and other social settings.