Challenging Conformity: A Case for Diversity

42 Pages Posted: 19 Nov 2016

See all articles by Willemien Kets

Willemien Kets

University of Oxford - Department of Economics

Alvaro Sandroni

University of Pennsylvania - Department of Economics; Northwestern University - Kellogg School of Management

Date Written: September 11, 2016

Abstract

This paper presents a novel mechanism under which diversity affects performance even if it has no direct impact on payoffs. Diversity matters because it influences the degree of strategic uncertainty that players face. We model this by incorporating the dual process account of Theory of Mind into the standard game-theoretic framework. Whether diversity is a cost or a benefit depends on whether the primary concern is to avoid miscoordination or to break out of an inefficient Nash equilibrium.

Keywords: diversity, game theory, belief formation, coordination failures, Theory of Mind

JEL Classification: C70, C72, D03, D83

Suggested Citation

Kets, Willemien and Sandroni, Alvaro, Challenging Conformity: A Case for Diversity (September 11, 2016). Available at SSRN: https://ssrn.com/abstract=2871490 or http://dx.doi.org/10.2139/ssrn.2871490

Willemien Kets (Contact Author)

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

HOME PAGE: http://wkets.org

Alvaro Sandroni

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5461 (Phone)
847-467-1220 (Fax)

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