The article presents findings from a two-stage study that examined student perceptions of peer evaluations (PEs) conducted in undergraduate business classroom teams. In stage 1, we used qualitative research to identify constructs focal in students' PE-related cognitive schemas and developed grounded measurement scales and hypotheses about their relationships. Then, we implemented PEs in 17 sections of undergraduate business courses taught over seven semesters. The PEs were highly consequential; i.e., they entirely determined the grade each student received on her/his team project. At the end of each semester, we surveyed student perceptions and behaviors using measurement scales we developed after stage 1 of the study. We find that the knowledge of impending PEs leads students to exercise a great deal of care in terms of what they say and do while working with others. The higher levels of care trigger both impression management behaviors and perceptions that others are contributing more. The perceptions that others are contributing more seem instrumental in shaping students' decision to contribute more themselves. Implications for instructors and future research are discussed.