There are, broadly, two explanations. One is that workers are spurred to greater efforts when contemplating the superior speed of their colleague. This is psychologically plausible but economically irrational. A more cynical explanation is that workers do not like it when faster colleagues are looking at them, because they fear being accused of slacking off. |Slate|
What the evidence showed was that there was a strong correllation between increased efficiency and falling under the gaze of a relatively more efficient worker. Leaving aside Harford's guesses about the underlying psychology, I don't see what's so cynical about the thought that observation motivates people to work work more efficiently. Sensitivity to the judgements of one's peers, it seems to me, is a necessary condition for the very existence of human civilization.
Two other quick thoughts. First, I think that Harford's valorization of individual contemplation is, as a matter of intellectual history, linked in interesting ways to the free will debate. Without going into detail let me just say that I think that a lot of this goes back to ideas that were introduced aroud the time of the Protestant Reformation. Second, I'd be curious to see what sort of hay feminist scholars can make of this line of research. My own experience is that when you start talking about the male gaze to the uninitiated they roll their eyes, so it would be helpful to be able to cite scientists rather than theorists when making assertions about the coercive effects of a gaze.