The Disagreement Dividend

Giampaolo Bonomi

Papers from arXiv.org

Abstract: We study how disagreement influences the productive performance of a team in a dynamic game with positive production externalities. Players can hold different views about the productivity of the available production technologies. These differences lead to different technology and effort choices -- "optimistic" views induce higher effort than "skeptical" views. Views are resilient, changed only if falsified by surprising evidence. We find that, with a single technology, when the team disagrees about its productivity optimists exert more effort early on than when the team is like-minded. With sufficiently strong externalities, a disagreeing team produces on average more than any like-minded team, on aggregate. When team members can choose production technologies, disagreement over which technology works best motivates everyone to exert more effort and seek early successes that make others adopt their preferred technology. This always increases average output if the technologies are similarly productive in reality.

Date: 2023-08, Revised 2023-09
New Economics Papers: this item is included in nep-gth and nep-mic
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