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Does reducing communication barriers promote diversity?

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  • Dong, Miaomiao
  • Mayskaya, Tatiana

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.

Suggested Citation

  • Dong, Miaomiao & Mayskaya, Tatiana, 2024. "Does reducing communication barriers promote diversity?," Journal of Economic Theory, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:jetheo:v:222:y:2024:i:c:s0022053124001388
    DOI: 10.1016/j.jet.2024.105932
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    References listed on IDEAS

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    More about this item

    Keywords

    Diversity; Communication;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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