The Costs and Benefits of "Strangers": Why Mixed Communities Are Better

Paul Grout, Sebastien Mitraille and Silvia Sonderegger

The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK

Abstract: Much of the literature on diversity assumes that individuals have an exogenous "taste for discrimination". In contrast with this approach, we build a model where preferences over the nature of one's community are derived indirectly, and arise because the composition of the community determines the behavior of its members. This allows us to gain a far deeper understanding of the forces that underpin the desirability of diversity or homogeneity within communities. Our main contribution is to show that there are always counteracting forces (heterogeneity involves both costs and benefits), and that, although people prefer to live in communities where their type is majoritarian, they always benefit from having some heterogeneity in the composition of their community.

Keywords: heterogeneity; social interactions; value of information; complementarities. (search for similar items in EconPapers)
JEL-codes: C7 D82 Z1 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2008-02
New Economics Papers: this item is included in nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bri:cmpowp:08/191

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