Review of Economic Studies Vol. 88 No. 1 2021
A Theory of Strategic Uncertainty and Cultural Diversity
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.
- DOI
- 10.1093/restud/rdaa037
- Volume
- 88
- Issue
- 1
- Pages
- 287-333
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref