Achievement

Today's workplace is comprised of increasingly diverse social categories, including various racial, ethnic, religious and linguistic groups. While a diverse workforce contains a variety of abilities, experiences and cultures which can lead to innovation and creativity, diversity may also be costly and counterproductive if members of work teams find it difficult to integrate their diverse backgrounds and work together. In this paper, we propose a group-contingent social preference model and derive conditions under which social identity changes equilibrium selection. We test our predictions in the minimum-effort game in the laboratory under parameter configurations which lead to an inefficient low-effort equilibrium for subjects with no group identity. For those with a salient group identity, consistent with our theory, we find that learning leads to ingroup coordination to the efficient high-effort equilibrium. (Chen and Chen 2011)