Does reducing communication barriers promote diversity?

Miaomiao Dong and Tatiana Mayskaya

Journal of Economic Theory, 2024, vol. 222, issue C

Abstract: We study how a reduction in communication cost affects equilibrium diversity (in expertise) in hiring decisions. The key trade-off is that, while hiring a more diverse team may enlarge the team's pool of knowledge, it also makes communication between the hired experts more challenging. Equilibrium diversity balances this trade-off. We find that equilibrium diversity may exhibit a U-shape relationship with communication cost, reaching its lowest point at moderate cost values, where experts' incentives to communicate are most sensitive to changes in diversity.

Keywords: Diversity; Communication (search for similar items in EconPapers)
JEL-codes: D82 D83 M14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:222:y:2024:i:c:s0022053124001388

DOI: 10.1016/j.jet.2024.105932

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