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Challenging Conformity: A Case for Diversity

Abstract

Why do diverse groups outperform homogeneous groups in some settings, but not in others? We show that while diverse groups experience more frictions than homogeneous ones, they are also less conformist. Homogeneous groups minimize the risk of miscoordination, but they may get stuck in an inefficient equilibrium. Diverse groups may fail to coordinate, but if they do, they tend to attain efficiency. This fundamental tradeoff determines how the optimal level of diversity varies with social and economic factors. When it is vitally important to avoid miscoordination, homogeneous groups are optimal. However, when it is critical to implement new and efficient practices, diverse groups perform better.

Type

Working Paper

Author(s)

Willemien Kets, Alvaro Sandroni

Date Published

2017

Citations

Kets, Willemien, and Alvaro Sandroni. 2017. Challenging Conformity: A Case for Diversity.

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