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Research Details

A Theory of Strategic Uncertainty and Cultural Diversity, Review of Economic Studies

Abstract

We identify a new mechanism through which cultural diversity affects economic outcomes, based on a model of culture as shared cognition. Under this view, cultural diversity matters because it increases strategic uncertainty. The model can help better understand a variety of disparate evidence, including why homogeneous societies can be more conformist, why diverse societies may get stuck in a low-trust trap, why companies with a strong culture may fail to adopt superior work practices, and why autocratic rulers in diverse societies may overinvest in state capacity.

Type

Article

Author(s)

Willemien Kets, Alvaro Sandroni

Date Published

2021

Citations

Kets, Willemien, and Alvaro Sandroni. 2021. A Theory of Strategic Uncertainty and Cultural Diversity. Review of Economic Studies. 88: 287-333.

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