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

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Author Info
Paul A. Grout
Sebastien Mitraille
Silvia Sonderegger ()

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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.

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Publisher Info
Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 08/191.

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Length: 18 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:bri:cmpowp:08/191

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Related research
Keywords: heterogeneity; social interactions; value of information; complementarities.;

Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
Z1 - Other Special Topics - - Cultural Economics

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