A Theory of Strategic Uncertainty and Cultural Diversity

Willemien Kets and Alvaro Sandroni

No 920, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We identify a new mechanism through which cultural diversity affects economic out­comes, based on a model of culture as shared cognition. Under this view, cultural diversity matters because it increases strategic uncertainty. The model can help better understand a variety of disparate evidence, including why homogeneous societies can be more con­formist, why diverse societies may get stuck in a low-trust trap, why companies with a strong culture may fail to adopt superior work practices, and why autocratic rulers in diverse societies may overinvest in state capacity.

Date: 2020-10-15
New Economics Papers: this item is included in nep-cul, nep-evo and nep-gro
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Citations: View citations in EconPapers (4)

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Journal Article: A Theory of Strategic Uncertainty and Cultural Diversity (2021)
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