**README** Depository contains all data and code needed to replicate the study. - netlogo model homophily_diversity.nlogo. To reproduce the simulation output used in the study, follow the instructions in the model code and run the BehaviorSpace experiments - stata do file homophily_diversity.do to clean simulation output and replicate figures - simulation output in .csv format - figure plots for reference **Abstract** Identity diversity in teams brings advantages for complex decision-making because it is associated with cognitive diversity among team members. At the same time, homophilic interactions along shared identity dimensions can hinder information exchange among dissimilar individuals and threaten successful exploitation of the team’s cognitive diversity. We present an agent-based model to investigate how homophily impacts decision-making quality in diverse teams. Team members communicate information in a ‘hidden profile’ setting where some pieces of information are known only to single individuals while other pieces of information are known to subgroups with the same identity. While intuition may suggest that homophily impairs collective decision-making, our model reveals how homophilous environments lead to better collective decisions: homophily fosters temporary disagreements between dissimilar team members, which grant teams additional time to uncover crucial information that would not have been shared otherwise. Longer discussion time comes along with improvements in the quality of the final decision, indicating a trade-off between the time needed to deliberate and decision quality.