Ulric B. and Evelyn L. Bray Social Sciences Seminar

Abstract: We analyze experimentally the strategic consequences of group identity-heterogeneity when coordination is necessary to realize superior social outcomes. We find that subjects in more heterogeneous groups experience greater uncertainty about others' choices. Independent of affect and social norms, subjects in such groups are more willing to choose an action that will yield a moderate payoff without conditioning on social coordination than an action that will yield high payoff when social coordination is achieved and low payoff otherwise. The choices of subjects who are members of an identity minority within a group are particularly sensitive to institutional features affecting coordination, and their beliefs about strategic play systematically diverge from those of the majority. We offer an alternative explanation of the negative relationship between diversity and successful collective action that has little to do with substantive differences between groups: Individuals are more certain about others' behavior in more homogeneous groups, making them more likely to bet on welfare optimal coordination with others.

Joint with Dominik Duell (University of Innsbruck) and Catherine Hafer (NYU)