This paper presents a model of team composition. Heterogeneous teams have a greater variety of information sources than homogeneous teams. If information and preferences can be expressed openly, heterogeneous teams reach better decisions. However, members of heterogeneous teams are more likely to diverge in their preferences with respect to courses of action, which is reflected in lower effort. Team leaders who are likely to be either uninformed or well informed about project payoffs prefer to form homogeneous teams. Authority vested in the team leader to replace a subordinate affects the sharing of information and may diminish the value of heterogeneous teams.
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