Gender composition and group dynamics: Evidence from a laboratory experiment with microfinance clients

•Using a laboratory experiment, we investigate the effect of gender composition on the group dynamics of microfinance clients.•In a novel face-to-face problem solving game, we find that female-only groups outperform both male-only and mixed groups.•Similarly, when making joint risk-decisions in groups, females-only groups take more risks than male.•However, in the public-goods game we find no robust evidence of female groups contributing more than male and mixed groups.

We investigate the effect of gender composition on the group dynamics of microfinance clients in Tanzania using a laboratory experiment. We focus on three dimensions: (i) the ability to collaborate on problem-solving, (ii) joint decision-making in risk taking, and (iii) the willingness to cooperate in a public-goods game. Our main finding is that female groups are better at collaborating in problem-solving than male and mixed groups, and are also more willing to take risks. However, in the public-goods game we find no robust evidence of female groups contributing more than male and mixed groups. Our findings suggest that one reason why female loan groups often have higher repayment rates than male and mixed groups may be that female groups are more able to collaborate and find common solutions to common challenges.