The question whether ethnic diversity is associated with declining social cohesion has produced much controversy. We maintain that more attention must be paid to cognitive mechanisms to move the debate ahead. Using survey data from 938 localities in Germany, France, and the Netherlands, we...

Previous research shows that many people seek financial advice from non-experts, and that peer interactions influence financial decisions. We investigate whether such influences are beneficial, harmful, or simply haphazard. In our laboratory experiment, face-to-face communication with a randomly...

The idea that worker utility is affected by co-worker wages has potentially broad labor market implications. In a month-long experiment with Indian manufacturing workers, we randomize whether co-workers within production units receive the same flat daily wage or different wages (according to...

How does the formation of cross-country teams affect the organization of work and the structure of wages? To study this question we propose a theory of the assignment of heterogeneous agents into hierarchical teams, where less skilled agents specialize in production and more skilled agents...

This paper provides the first in-depth study of the organization of knowledge in multinational firms. The paper develops a theoretical model that studies how firms optimally split knowledge between their headquarters and their production plants if communication costs impede the access of...