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date: 20 January 2020

A Review of Gender Differences in Negotiation

Summary and Keywords

Gender differences, both in entering negotiations and when negotiating, have been proved to exist: Men are usually more likely to enter into negotiation than women and when negotiating they obtain better deals than women. These gender differences help to explain the gender gap in wages, as starting salaries and wage increases or promotions throughout an individual’s career are often the result of bilateral negotiations.

This article presents an overview of the literature on gender differences in negotiation. The article is organized in four main parts. The first section reviews the findings with respect to gender differences in the likelihood of engaging in a negotiation, that is, in deciding to start a negotiation. The second section discusses research on gender differences during negotiations, that is, while bargaining. The third section looks at the relevant psychological literature and discusses meta-analyses, looking for factors that trigger or moderate gender differences in negotiation, such as structural ambiguity and cultural traits. The fourth section presents a brief overview of research on gender differences in non- cognitive traits, such as risk and social preferences, confidence, and taste for competition, and their impact in explaining gender differences in bargaining. Finally, the fifth section discusses some policy implications.

An understanding of when gender differences are likely to arise on entering into negotiations and when negotiating will enable policies to be created that can mitigate current gender differences in negotiations. This is an active, promising research line.

Keywords: gender differences, wage gap, propensity to negotiate, negotiation, bargaining, cultural factors, backlash, structural ambiguity, risk preferences, confidence, preferences for competition

Do Gender Differences in Negotiation Contribute to the Gender Wage Gap?

Traditional explanations that consider gender differences in human capital, discrimination, and preferences cannot fully account for the observed gender wage gap (Blau & Khan, 2017). The unexplained part has traditionally been attributed to discrimination, but recently economists have drawn attention to behavioral and non- cognitive traits.1 Among the latter, gender differences in negotiation have been put forward as an important mechanism for explaining the observed gender wage gap.

Starting wages are often the result of bilateral negotiation. Wages are further affected by bargaining later in one’s career, for example pay increases. If women are less likely to negotiate starting salaries and ask for pay increases, and/or if women obtain worse deals when negotiating, this would clearly go some way toward explaining the gender wage gap (Azmat & Petrongolo, 2014; Bertrand, 2011; Blau & Kahn, 2017).

Card, Cardoso, and Kline (2016) provide a nice piece of research showing how gender differences in negotiation affect the gender wage gap. Using administrative data from Portugal, they control for a rich set of control variables and find that firm-specific wage premiums (put simply, overpayments above the competitive wage in a given industry) explain between 20% and 30% of wage variation, depending on the specification used. When breaking down how this firm-specific wage premiums affects the gender wage gap, they estimate that underrepresentation of women at firms that offer higher wage premiums explains between 15% and 20% of the gender wage gap (similar to the findings reported in Bertrand & Hallock, 2001). Importantly, their approach enables them to estimate that gender differences in bargaining, that is, in the ability to capture a pay premium within a firm, can explain between 5% and 15% of the gender wage gap. They also show that women are less responsive than men to firm-specific wage premiums as they only capture 90% of the wage premiums earned by men, that is, for each dollar that a man is able to capture from the firm-specific premium, women only capture 90 cents. This is interpreted by the authors as clear evidence for men having greater average bargaining power than women.2

Säve-Söderbergh (2019) offers a more direct assessment of the effect of gender differences in bargaining on the gender wage gap. She collects rich survey data from 38,347 recent college graduates from Sweden. A clear advantage of this study is that it offers the possibility of studying the channels through which gender differences in negotiation potentially operate. In particular, she finds that, on average, women request between 2.6% and 3.1% lower salaries than comparable men and that this accounts for almost all of the gender gap that remains unexplained after including other controls such as industry and major, reducing it from 3.8% to 0.6%. Finally, her study further shows that the weight of gender differences in negotiation in the gender wage gap is greater among those who get higher starting salaries: Gender differences in salary requests explain about two-thirds of the gender wag gap among those in the lower half of the salary distribution, but their explanatory power jumps to five-sixths in the top half of the distribution.

Despite the fact that administrative and survey data can show the implications of gender differences in negotiation on real-life outcomes, the downside is that it is unable to properly address causality and the mechanisms underlying those gender differences, either because there are self-selection issues or because data on variables of interest (i.e., risk aversion or existing stereotypes) are not observable.

The following sections focus mainly on field and laboratory experiments which provide a promising way to shed light on the real triggers of these gender differences. We first review the main literature on whether men and women show different propensities to engage in bargaining, then we move on to review the corresponding literature on gender differences in negotiation outcomes.

Are Women Less Likely to Negotiate?

A natural starting point when studying gender differences in negotiation is to consider whether men and women engage in bargaining at similar rates, that is, to look at self- selection into bargaining environments. If men and women display different attitudes toward starting a negotiation, this would help to explain why they end up with different wages despite having similar education, training, and job characteristics.

The influential book by Linda Babcock and Sara Laschever Women Don’t Ask (2003) reveals major gender differences in the likelihood of negotiating. The study with the most striking result mentioned in the book shows that among graduates of Carnegie Mellon University 57% of men but only 8% of women negotiated the starting salaries offered to them. This finding has been replicated both in the field and in the laboratory (e.g., Eriksson & Sandberg, 2012; Leibbrandt & List, 2014; Small, Gelfand, Babcock, & Gettman, 2007). For example, Hall and Krueger (2012) use survey data from a representative sample of U.S. workers and find that 50% of men but only 24% of women in the sample negotiated their salary at their current job.3 However, there is also a considerable amount of research that does not replicate this finding. For instance, Säve-Söderbergh (2019) looks at survey data on recent college graduates from Sweden and finds that women are significantly more likely to make salary requests than men, although the figure of 2% seems rather small. The paper by Gerhart and Rynes (1991) also proves to be an exception, as they find that out of a sample of about 200 freshman MBA students at Ivy League business schools in three academic years in the late eighties the same proportions of men and women negotiate their initial salaries.

Therefore, whether men and women differ in their propensity to enter a negotiation and, if so, whether this holds for the whole population and all situations is a matter for controversy. In the rest of this section, we review some studies that illustrate some reasons for the ambiguous results regarding this issue.4

We start by looking the impact of gender interactions, that is, the impact of the gender of the counterpart. In a laboratory setting, Eriksson and Sandberg (2012) find that women are less prone overall to start a negotiation. Interestingly, in their experiment the gender of the counterpart is disclosed, enabling the authors to look beyond gender differences and also investigate gender interaction effects. They show that looking only at gender differences can be misleading, as in their data women are less likely to start a negotiation when the counterpart is female, but not when he is male. Related to this, Hernandez-Arenaz and Iriberri (2018) also find a gender interaction effect using data from a TV show in which contestants can choose their bargaining counterpart. They find that men are more likely than women to choose male bargaining partners, suggesting that either tastes or beliefs play a role in the choice of the bargaining partner and that the gender of the counterpart may thus affect the likelihood of engaging in bargaining.

Another important factor that seems to affect whether there are gender differences in starting a negotiation is how explicit the possibility of negotiation is. A recent field experiment by Leibbrandt and List (2014) supports the idea that ambiguity as to whether negotiation is allowed is crucial. The authors posted job offers in several newspapers with little information about the position to be covered. Those who showed interest in the position were allocated randomly by the authors to either a treatment in which the possibility of negotiation was made explicit or one in which it was not. They obtained a final sample of 2,500 job seekers and found that women were less likely to negotiate wages when they were not described explicitly as negotiable, but that the difference disappeared when they were described as negotiable.

Small et al. (2007) present a similar finding on the importance of ambiguity, but they find that the term used for negotiation also matters. They set up a lab experiment in which subjects were told that they would receive an amount ranging between $3 and $10. All subjects played a word game (“Boggle”) and were later paid the minimum amount of $3. If they asked for more money they were paid more, up to $10. The authors found that describing the final payment as negotiable did not eliminate gender differences with the treatment in which payment was not explicitly described as negotiable. However, when the subjects were told that they could “ask for more payment” the gender gap in the propensity to negotiate disappeared. In this context, the authors argue that although “asking” and “negotiating” are equivalents in the context of this experiment, the semantic difference between them might trigger different emotions among women. In particular, using a post-experimental survey, they find that the degree of intimidation felt before a negotiation is an important moderator of the gender gap in the propensity to start a negotiation and that the degree of intimidation felt by women depends greatly on whether the exercise is described as “negotiating” or “asking.”

A number of papers have looked at the potential backlash anticipated by women when they engage in negotiation as a possible reason for finding differences in the propensity of men and women to engage in bargaining. Relying on social psychology literature, several authors have noted that female identity may be threatened if women engage in negotiation, an activity which is more acceptable for men than for women. This loss of identity may not only make women less comfortable when negotiating but also affect how others evaluate them, generating a backlash effect. For example, in an experiment in which subjects had to evaluate candidates’ résumés, Bowles, Babcock, and Lai (2007) show that hireability was negatively affected by attempts by candidates to negotiate. More importantly, the penalty imposed by subjects was greater for female candidates than for male candidates, providing direct evidence of a gender-asymmetric backlash effect.

They also show that if candidates did not attempt to negotiate, men and women with the same résumé were rated equally in terms of hireability, but if they did negotiate the hireability of men was greater than that of comparable women. Related to this, Kaman and Hartel (1994) show that men legitimate the use of bargaining more and are more likely to bargain actively, while women are more likely to use traditional self-promoting techniques instead of engaging in pure bargaining. Interestingly, these authors also show that gender differences in pay expectations, which are correlated with real outcomes, are substantially moderated by the extent to which the use of bargaining is legitimated. More recently, Amanatullah and Morris (2010) show in a laboratory setting that the greater backlash suffered by women is anticipated by them. They do not focus on decisions as to whether or not to enter negotiations, but they show that anticipation of the backlash effect makes women behave more softly in negotiations, matching the social norm in order to avoid the backlash effect.

Another potential explanation is put forward by Small et al. (2007). They argue that women find it intimidating to negotiate (but not to ask, which is perceived to be softer and politer) because they lack power in society. To examine this issue, they performed an experiment in which they had a control group plus a treatment in which subjects were primed with feelings of power. Consistent with their hypothesis, they found that priming with power did not affect men’s self-reported levels of intimidation when facing negotiation, but decreased the intimidation felt by women to levels similar to those of men.

An important question that remains open, however, is how detrimental this lower propensity of women to bargain is. A partial answer can be found in Greig (2008). She shows that attitude toward negotiation is correlated with promotions, even after performance is controlled for. Her results are strengthened by the observation that this relationship is weaker where performance can be measured objectively. Thus, Greig (2008) argues that the fact women show a lower propensity to bargain may explain why their professional advancement is slower than that of men (women are in a “slower elevator”). However, this argument presupposes to some extent that the impact of negotiation on labor prospects is the same for men as for women and that the propensity to negotiate among men and women is related to the same outcome. Exley, Niederle, and Vesterlund (forthcoming) show somewhat different findings. They propose a controlled environment under two different treatments. In the “Choice” treatment, subjects can choose between starting a bargaining process and accepting “a suggested wage.” In the “Always” treatment, subjects have no such choice and are forced to bargain. They find the standard result that women are less likely to start bargaining in the “Choice” treatment. Interestingly, when they compare bargaining performances in the “Choice” and “Always” treatments they find strong self-selection as only those women who will really profit from bargaining actually bargain, while there is no such self-selection for men. In other words, they find that men bargain significantly more often than women but also that encouraging women to bargain would not, ceteris paribus, necessarily benefit them.

Do Men and Women Perform Differently in Negotiations?

Self-selection in negotiation environments is only the first step in understanding gender differences in bargaining. Even if men and women self-select into negotiation at the same rate, gender differences could still arise in the outcomes that they attain.

Gender differences in bargaining have been shown using field and administrative data. One of the first studies using administrative data is that of Dalton, Todor, and Owen (1987), which analyzes how grievance cases in the workplace are resolved. Interestingly, in these processes the employee is not a party to the dyad that must resolve the dispute. This eliminates the explanation of discrimination (toward the employee) and shifts the focus solely to gender differences in bargaining outcomes (measured in terms of whether the employee wins the dispute). They use data from grievances in which a union member acting as representative of the employee discusses the case with a representative of the firm. They find suggestive evidence that the proportion of resolutions favoring the employee depends on the gender composition of the dyad, with a male supervisor and a male union member attaining the highest success rate for the employee and the lowest being that of a male supervisor and a female union member. However, these results should be interpreted only as suggestive evidence, given that the gender composition of the bargaining dyad and the severity of the grievance are highly correlated.

Gerhart and Rynes (1991) study a cleaner setting, where the authors use a survey to analyze the negotiation behavior of about 200 freshman MBA students at an Ivy League business school in three academic years in the late eighties. They observe that structural conditions (outside options, initial wage offered, etc.) predict bargaining propensity and that engaging in bargaining pays off for both men and women, as those who negotiate their initial salary actually attain higher salaries. However, they find that the impact of bargaining is greater for men than for women: Bargaining increases the initial offer received by 4.3% for men, but by only 2.7% for women. This research shows that gender differences in bargaining exist, but it provides no understanding as to whether they arise from the demand side and/or the supply side.

Lab experiments could help to shed light on this issue. Earlier work dealing with bargaining in laboratory experiments used mostly simple games which capture important features of bargaining processes. One of the most widely used is the ultimatum game, which is an extensive form game starting with a proposer who is endowed with certain amount of money and followed by a responder. The proposer decides on how to split the pie between the two players and the responder can either accept or reject. If the responder accepts then the division is implemented and if the responder rejects the split both get zero. This game is thus posed as a very simple, straightforward way of looking at some key elements of bargaining environments. Eckel and Grossman (2001) present an ultimatum game in which gender information is provided by setting up face-to-face groups of four proposers and four responders who interact with one another anonymously. These authors make gender in each role public knowledge by playing with the gender combinations of the groups. Their results show that women reject and are rejected less often, increasing the success rate of the bargaining game (labeled by the authors as solidarity) and that men are more likely to accept offers from women than from men (labeled by the authors as chivalry). Notice that these results capture both the existence of gender differences (women reject less as responders) and gender interaction effects by which the gender of the other party affects behavior (women are rejected less and men are more likely to accept offers from women). Solnick (2001) also explores whether there are gender differences and gender interaction effects in the ultimatum game. Using the strategy method and disclosing the gender of participants by means of their first names, she finds strong gender interaction effects, with female responders receiving lower offers and responders setting a higher minimum acceptable offer (the lowest offer that a responder is willing to accept) for female proposers (which ultimately reduces the acceptance rate of offers by female proposers). Importantly, this last finding contradicts that of Eckel and Grossman (2001), but this may be explained by differences in their methods as the latter use the game method to elicit strategies and participants have visual contact, while in Solnick (2001) behavior is elicited using the strategy method with no visual contact. These papers show that gender differences in this game are more likely to arise when gender is made salient enough (Eckel, De Oliveira, & Grossman, 2008).

Sutter, Bosman, Kocher, and van Winden (2009) also focus on whether there are gender interaction effects in bargaining. To that end they use a similar game—the power-to-take game—and disclose the gender of participants by directly informing each subject of the gender of his/her partner.5 They find that both the take rate and the destruction rate are greater in same-gender pairs, resulting in less cooperation and greater inefficiencies.

These simple settings enable researchers to look at gender in simple bargaining situations. However, such one-shot interactions may not suffice to capture all the richness of bargaining. Rather, they seem to inform more about differences in cooperative and competitive behavior which, although key for bargaining settings, may not be enough to identify critical gender differences when negotiating. In this sense, the laboratory experiment by Dittrich, Knabe, and Leipold (2014) seems a better proxy for real-life situations. These authors report experimental results from an alternating-offer bargaining setting in which one subject plays the role of the employer (offering a wage) and the other that of a worker (accepting or rejecting and demanding a wage) to carry out a project worth a pre-set amount. The bargaining task thus consists of reaching an agreement on how to split the project’s value between the employer and the worker. The bargaining starts with the firm offering an initial wage to the worker, who can accept or reject it. If the offer is rejected the worker can make a counteroffer, which may be accepted or rejected by the firm, and so on and so forth. Three important features should be noticed. First, from the third round on there is an exogenous 20% probability that the bargaining will end after each rejection. Second, if the parties fail to reach an agreement the firm has a positive outside option while the worker has none. Finally, bargaining takes place face to face, although participants can only communicate via a prepared form. In this setting, the authors find that gender differences are role-dependent: Women obtain worse deals than men, but only when they play the role of the worker. In addition, the setting enables the authors to conclude that gender differences are generated in opening offers, with male employers offering less to female workers, and in first counteroffers, with male workers demanding more from female employers.

Economists have also used field experiments to look at gender differences in negotiation. Ayres and Siegelman (1995; see also Ayres, 1991) carried out a field experiment in which a series of confederates were sent to car dealers to negotiate for a new car. When they varied the gender of the confederates, who were otherwise trained to have the same bargaining behavior with the car dealer, they find evidence of discriminatory behavior by the dealers during the bargaining: Car dealers end up charging higher prices to women than to comparable men. More recently, Castillo, Petrie, Torero, and Vesterlund (2013) also use confederates to negotiate taxi rides and find that men are charged higher final prices. To examine this atypical result of women getting better deals than men, the authors run a second treatment in which confederates signal their valuation for the ride. In this treatment they find no gender differences, showing that the difference found in the first treatment is due to the fact that taxi drivers engage in statistical discrimination when bargaining by considering male passengers as high-valuation customers. Notice that existence of statistical discrimination during the negotiation could also be behind the results in Ayres and Siegelman (1995). Although the setting is not directly related to the labor market, it makes clear that there is discrimination in bargaining. Extrapolating this finding to the labor market, one might suppose that women may be discriminated against in the workplace when negotiating because they are perceived by employers as having lower outside options and thus having a lower minimum acceptable offer.

The field experiments described provide very valuable information on the fact that discrimination may be a real issue in bargaining but miss one important aspect of the bargaining structure: the interaction between two parties who usually hold asymmetric roles which differ in their strength. By the nature of field experiments, experimentalists are limited to looking at behavior in only one role. The interaction between the role played and gender differences has been shown to matter. One example is the result in Dittrich et al. (2014) as mentioned. In that paper, gender differences arise on the worker’s side but not on the employer’s.

Another piece of evidence suggesting that bargaining positions play a critical role is provided by Hernandez-Arenaz and Iriberri (2018). They use data from a TV show in which a proposer is endowed with an amount of money (only known to him/her) and must look for a responder on the street to answer a simple question. Once the proposer finds someone who gives the correct answer, they bargain over the price of the answer. The aim of the proposer is to get the correct answer for the question and to close a deal on the price of the answer within a three-minute limit. If they close a deal and the answer is correct, the responder gets the agreed price while the proposer gets the initial endowment minus the agreed price. On aggregate there are no gender differences in either role. However, a look at the dyad composition reveals that all gender matchings are equivalent in terms of final outcomes except that of a male proposer and a female responder. This matching differs from all the others in that the proposer gets the most and the responder the least. In addition, the authors show that the reason for this finding does not lie in discrimination by male proposers against female responders but rather in that when female responders are matched with male proposers they demand significantly less than in any other matching. Since the proposer is in a significantly stronger position than the responder (proposers have outside options and more information), the authors show that the underperformance of women in bargaining critically depends on the bargaining partner and on the bargaining role: When matched with male partners women get worse deals only when women hold the weak bargaining position.

Finally, Andersen, Ertac, Gneezy, List, and Maximiano (2017) conduct a lab experiment using two different societies. One of them (the Kharbi) is patriarchal while the other (the Khasi) is matrilineal. The experiment involves subjects playing the roles of buyers and sellers who have to negotiate the price of a good in an alternating-offer setting (with an exogenous probability of ending the negotiation). Their results show that there are no gender differences in the buyer role but in the seller role men obtain better deals than women among the members of the patriarchal society while the reverse is true for the matriarchal society. Like the previous papers, this one also suggests that gender differences are more likely to arise in the bargaining party with the weaker position. Moreover, playing with two different cultures provides evidence that gender differences are culturally sensitive, with the gender that is less empowered in the society coming off worse. This seems to suggest that gender differences are more related to nurture than to nature.

Main Factors Affecting Gender Differences in Negotiations

Most of the studies reviewed in this article find the stereotypical result that women negotiate less frequently and obtain worse deals, but there are studies that find no gender differences or even find evidence of gender differences in the opposite direction. Thus, the question that arises is whether one can really talk about gender differences in negotiation and if so what situations or factors favor their occurrence.

With this aim, Stuhlmacher and Walters (1999) carry out a meta-analysis on 21 studies from social psychology using explicit negotiations and find an overall significant effect supporting the stereotypical results, with women obtaining worse deals than men.

Although their results suggest that features in the bargaining environment may be affecting the size of gender differences (relative bargaining power, dyadic gender combination, and communication method), the statistical analysis does not return sound enough evidence to claim that these factors significantly moderate the gender gap in bargaining outcomes. However, this may very likely be because of the lack of statistical power.6 More recently, Mazei et al. (2015) perform a larger meta-analysis that considers results from 51 studies involving 123 effect sizes; 83 of which support the stereotypical results while the other 40 return counter-stereotypical or non-significant effects.

Overall, the meta-analysis cannot reject the contention that men obtain better outcomes from bargaining than women. In addition, the authors find a large degree of heterogeneity across effect sizes, indicating the presence of substantial moderators of gender differences in performance. The most recent meta-analysis, focused on gender differences in entering into bargaining processes, is that of Kugler, Reif, Kaschner, and Brodbeck (2018). It comprises 55 studies including both students and employees. The authors conclude that women are indeed less likely to start bargaining than men, but the effect sizes are small and highly context-dependent.

Based on these meta-studies, three significant moderating factors are outlined: who benefits from bargaining, structural ambiguity, and cultural factors.

Who Benefits from Bargaining?

The first important moderator effect is whether the negotiation involves personal incentives or is carried out on behalf of others. Results show that gender differences are important in the first case but less so in the second. Amanatullah and Morris (2010) and Amanatullah and Tinsley (2013) provide evidence and an explanation for this.

Amanatullah and Morris (2010) show that women who negotiate for themselves see more likelihood of a backlash from negotiating aggressively than men or than women negotiating for others. This anticipation of a backlash makes women negotiate for themselves less assertively, demanding lower initial salaries (around 20% lower in their experiment). In addition, they show that self-advocated women are aware that they are less competitive, which means that this is a conscious strategy. Amanatullah and Tinsley (2013) supplement these findings by showing that bargaining style has no effect on the potential backlash for men, but self-advocating women suffer a greater backlash when they behave assertively. In addition, they show that women bargaining on behalf of others are punished if they are not assertive enough. The authors claim that this relationship between assertiveness, advocacy, and backlash is operationalized by existing gender roles: Women are expected not to use assertive tactics when bargaining for themselves because they should be soft and cooperative, but they must use them when bargaining for others because they should be protective toward others. Similar arguments and evidence supporting the connection between gender roles and the existence of a backlash can also be found in Bowles et al. (2007) and Kulik and Olekalns (2012).7 See also Wade (2001) for an early review.

Ambiguity: The Lack of Clear Rules

Another important moderator found by Mazei et al. (2015) is the degree of structural ambiguity. They find that gender differences are at their greatest when negotiators have no information about the bargaining range. This is clearly seen in Bowles, Babcock, and McGinn (2005).

First, they use survey data to categorize MBA students according to whether they accept a job in an industry with high or low structural ambiguity, that is, whether the base salary is well known or uncertain. After controlling for a set of observable characteristics, they find no gender differences in the salary obtained by MBA students working in low-structural-ambiguity industries but a significant gender wage gap of 10% among those who work in high-ambiguity industries. Importantly, the degree of ambiguity has a significant effect on the gender gap, which strongly suggests a causal relationship. In a subsequent laboratory experiment, Bowles et al. (2005) use a buyer–seller setting to implement two treatments (high vs. low ambiguity) by manipulating the information available to buyers. Their findings replicate those obtained in the field, with major gender differences favoring men in the selling price under the high-ambiguity treatment but no differences in the low-ambiguity one. Based on this experiment, the authors draw up pre-negotiation expectations and find that those expectations already show gender differences very similar to the ones found in outcomes. More recently, Hernandez- Arenaz and Iriberri (2019) present the results of experiments in which subjects have to bargain via alternating offers under different bargaining settings. In line with the results given, they find that in a symmetric environment where the 50:50 split is the norm there are no gender differences. A 50:50 split norm represents a low-structural-ambiguity setting. However, once asymmetries are imposed (through empowerment, entitlement, or the availability of information) significant gender differences in favor of men arise. The authors interpret that asymmetries induce the appearance of gender differences precisely because of the lack of a clear sharing rule. In all asymmetric settings one bargaining role is expected to gain more than the other but they both have enough wiggle room for there to be no clear sharing rule, which is compatible with high structural ambiguity.

Ambiguity also moderates the gender differences in entering into bargaining processes. In particular, “ambiguity” in this context refers to ambiguity as to the appropriateness of bargaining. Gender differences are lowest when bargaining is both expected and accepted, and largest when it is neither expected nor accepted. The early paper by Small et al. (2007) and the later paper by Leibbrandt and List (2014) are consistent with the existence of this moderating factor.

Cultural Factors

Several studies point out the importance of cultural factors such as stereotypes or social norms for understanding gender differences in bargaining. To recap, Andersen et al. (2017) show that gender differences reverse depending on whether matriarchal or patriarchal societies are considered. Amanatullah and Tinsley (2013) convincingly argue that there is only a backlash for women when they violate prescriptive gender roles. Mazei et al. (2015) also find in their meta-analysis that when all the moderating factors take values that increase the role congruity of women with bargaining tasks the gap not only vanishes but is actually reversed. Small et al. (2007) claim that women are less likely to negotiate because they lack power in society. All these studies are in line with the meta-analysis performed by Shan, Keller, and Joseph (2019), which covers gender differences in performance drawn from 112 articles from 30 different countries and explores the roles played by Hofstede’s, GLOBE’s, and Schwartz’s indexes in determining the gap. The authors find that the size of the gender gap is negatively related to the gender-equality, in-group collectivism, and harmony indexes, but positively related to the individualism and assertiveness indexes. They interpret this as clear evidence that “men’s superior performance was stronger in societies that emphasized agency over communalism in values and practices” (p. 661).

A clear consequence of a particular culture is the existence of gender-related stereotypes. In this line, Kray, Thompson, and Galinsky (2001) and Kray, Galinsky, and Thompson (2002), inspired by the literature on stereotype threat (Steele, 1997), show experimentally that the existence and sign of gender differences in bargaining outcomes are sensitive to the activation of certain stereotypes concerning men and women. Tellhed and Björklund (2011) replicate these findings and supplement them by showing that the reservation wage (the minimum outcome that a negotiator is willing to accept in a negotiation) mediates the effect of stereotype threat.

Relevant Gender Differences in Other Non-Cognitive Traits

Bargaining or negotiation is a game where cooperation and competition are interlinked, because the individuals who bargain have the common aim of reaching an agreement (cooperative motivation) but also face competition, given that what one bargaining role wins is a loss for the other. In this final section, we briefly review four behavioral traits in which gender differences have been documented and which may be of importance when deciding to negotiate or while negotiating: competition, risk, social preferences, and confidence.

Gender Differences in Competitive Settings

Gender differences have been shown to be important on entering into competitive settings (see Niederle & Vesterlund, 2011, for a review) and when performing in competitive settings (Antonovics, Arcidiacono, & Walsh, 2009; Gneezy, Niederle, & Rustichini, 2003; Iriberri & Rey-Biel, 2017, 2019).This branch of the literature typically finds that women are less likely to participate in competitive environments and that when they are forced to compete their performance is lower than that of comparable men. This characteristic could be crucial in explaining the existence of gender differences in both entry and performance: If bargaining is seen as a competitive task, given the results about gender and competition, women should be expected to enter into bargaining processes less often and, when they do enter, to perform less well than men with the same bargaining abilities. This reasoning is in line with the findings of Walters, Stuhlmacher, and Meyer (1998), who run a meta-analysis covering 62 different studies and find that women do behave, on average, in a less competitive way than men when bargaining.8

Gender Differences in Risk Aversion

Risk plays a role when bargaining. Starting a bargaining process may backfire as the individual may look too greedy or even lose the opportunity to make a deal as a result. Moreover, if the individual finally bargains he or she should decide how to behave during the bargaining, as making higher demands and lower offers might pay off but may also increase the risk of failure. Thus, most decisions in a bargaining environment are closely related to individuals’ risk preferences. Again, men and women are found to have different risk preferences, although the differences between them are highly dependent on the methodology used to elicit risk preferences (Croson & Gneezy, 2009; Filippin & Crosetto, 2016). In this regard, the actual protocol used in structured bargaining might affect whether or not there are gender differences. For example, Dittrich et al. (2014) use a random stopping time, such that after the third round of an alternating-offer procedure there is a 20% probability of negotiations breaking down.

Such protocols might increase the likelihood of gender differences appearing because men are found to be more prone to risk-taking than women. A clear example of the impact of gender differences in bargaining can be found in Hernandez-Arenaz and Iriberri (2019). The authors find that overall men make greater demands and lower offers, enabling them to obtain greater payments when an agreement is reached.

However, this more aggressive form of bargaining comes at the expense of more frequent failures to close a deal. The net result is that overall men and women obtain the same final payment.

Gender Differences in Social Preferences

Social preferences and adherence to norms of fairness comprise another area in which men and women are shown to be different, though the differences depend highly on the context (Croson & Gneezy, 2009). Differences in this regard show up when there are multiple sharing norms from which individuals may choose. However, when a single sharing norm must be followed, such as the 50:50 norm in the control treatment in Hernandez-Arenaz and Iriberri (2019) or the procedure suggested in Exley et al. (forthcoming), these potential gender differences in social preferences might be less of a concern. Interlinked with gender roles and stereotypes, women are believed to be more cooperative and altruistic (Aguiar, Brañas-Garza, Cobo-Reyes, Jimenez, & Miller, 2009), which may work against them in bargaining for two different reasons. First, women may feel pressured to behave in a more cooperative way in order to fulfill their expected role. Second, as pointed out, breaking gender roles by not complying with stereotypical behavior may generate a negative backlash. An implication of this is shown, for example, by Solnick (2001), who, using the ultimatum game, shows that the minimum acceptable offer is set higher for female proposers that for male ones. In other words, responders expect better offers from female proposers and they are willing to punish them if this is not the case. If, as shown, this is anticipated by women, it will negatively affect their performance when bargaining by making them behave less assertively.

Gender Differences in Confidence

Finally, confidence is shown to play an important role in many economically relevant tasks, such as when choosing to compete or while competing (see Niederle & Vesterlund, 2011, for a review). This could be extrapolated to negotiations, as confidence might play an important role in such situations. As in many other settings, men and women might also differ in their confidence in their ability to bargain.

Hernandez-Arenaz and Iriberri (2019) indeed find that women are less confident in their ability to bargain than men. This may be closely correlated with the stereotype of what “male” and “female” tasks are, with wage bargaining in particular perhaps considered more of a male task. Related to this, in the belief elicitation task set by the same authors both men and women are found to believe that men are better than women at negotiating. Previous research has studied the role of confidence in negotiations and how this affects performance. Stevens, Bavetta, and Gist (1993) carry out an experiment in which subjects attend a generic training session on negotiation. After the training, women still negotiate lower salaries than men. This is explained by differences in initial expectations and, in particular, by differences in salary goals. Extra training in goal setting did not change the gender gap in salaries. However, extra training in self-management (addressed at increasing confidence and a sense of control over the negotiation process) succeeded in closing the gap.

Also highlighting the role of expectations in the appearance of gender differences in a workplace setting, Reif, Kunz, Kugler, and Brodbeck (2019) examine the interplay between expectations and stereotypes. In a survey-based experiment, they find that overall men are more likely to start negotiations, but that the existence and direction of this gender difference is context-dependent. For example, men are more likely to bargain in contexts concerning job issues while women are more likely to do so in contexts of mutual living issues.

Moreover, splitting the analysis between masculine and feminine contexts (according to the gender difference in the propensity to negotiate), women’s lower engagement in bargaining in masculine contexts can be explained by their lower confidence in their bargaining abilities and in their lower expectations as to the outcome of bargaining (instrumentalization of the ability) compared to men, “perhaps because women anticipated backlash” (Reif et al., 2019, p. 15). However, in feminine contexts, women’s greater propensity to start a bargaining process is only mediated by greater expectations as to the outcome of bargaining than among men.

Now What? Some Policy Implications

This review of the literature makes two main points. First, overall gender differences exist in both entry and performance in bargaining. Importantly, this is especially true within the workplace, where such gender differences help to explain a large part of the gender wage gap. Second, the size and very existence of gender differences are highly sensitive to cues in the bargaining framework, which strongly suggests that gender differences in bargaining contexts are driven by nurture, not by nature. This means that there may be room for policy interventions to eliminate, or at least reduce, the impact of gender differences in bargaining.

The first straightforward intervention would be to reduce the role played by bargaining in setting wages. This potential solution is examined by Cahen (2019), who uses U.S. reforms in public administrations to show that restricting collective bargaining increases gender differences. In particular, she shows that individualizing labor contracts negatively affects women but has no substantial effects on men. One reason for this is that individualization of contracts makes the role of bargaining more important in salaries, bonuses, and promotions.

Another, less disruptive action would be to teach women how to avoid the backlash effect, one of the important moderator factors reviewed in this article: If women do not fear backlash effects they will bargain more often and more effectively. As shown by Amanatullah and Tinsley (2013), this effect comes mainly from violations of prescriptive gender norms. Bowles and Babcock (2008) show that showing legitimacy (through claiming the existence of outside options) is not enough to break down this backlash effect. However, study 4 in their paper shows that justifying negotiations by means of the advice of an “authority” makes women appear more relational and eliminates the backlash effect.

From an organizational perspective, one way to alleviate both the direct and anticipatory backlash effects is to set bargaining zones in which the terms subject to bargaining are clearly stated in an organizational way. This instrument makes it common knowledge that asking is appropriate and indicates how much can be asked without contravening organizational norms. This affects both employers (whose negative feelings to the negotiator are reduced) and employees (by making it explicit that bargaining on certain terms is allowed). In addition, these bargaining zones could also include clauses on the conditions in which it is appropriate to bargain (e.g., outside options or performance criteria). One aspect of these bargaining zones is that they make the concept of “fairness” within the organization clearer and more salient so concepts such as greediness or assertiveness play less of a role. An example can be found in Leibbrandt and List (2014), where the authors show that describing the wage as negotiable (therefore providing a bargaining zone on this issue) cancels out gender differences in the propensity to start a bargaining process.

In the longer term, empowering women (with “empowerment” understood in a broad sense such as fostering their confidence and breaking existing stereotypes about negotiation being a “male” task) should also help to reduce the gender gap in bargaining. This should reduce the fear of backlash (Bowles et al., 2007) and result in closer identification between female identity and non-cognitive traits associated with bargaining (such as risk-taking, confidence in bargaining ability, and competitiveness).

Acknowledgments

The authors acknowledge financial support from Norwegian Research Council (TOPPFORSK 250506).

Further Reading

Babcock, L., Bowles, H. R., & Bear, J. (2012). A model of when to negotiate: Why women don’t ask? In R. Croson & G. E. Bolton (Eds.), The Oxford handbook of conflict resolution (pp. 313–331). Oxford, U.K.: Oxford University Press.Find this resource:

Bowles, H. R. (2013). Psychological perspectives on gender in negotiation. In Michelle K. Ryan & Nyla R. Branscombe (Eds.), The Sage handbook of gender and psychology (pp. 465–483). London, U.K.: SAGE Publication Ltd.Find this resource:

Gelfand, M. J., Severance, L., Fulmer, C. A., & Al-Dabbagh, M. (2012). Explaining and predicting cultural differences in negotiation. In R. Croson & G. E. Bolton (Eds.), The Oxford handbook of conflict resolution (pp. 332–358). Oxford, U.K.: Oxford University Press.Find this resource:

Haselhuhn, M. P., & Kray, L. J. (2012). Gender and negotiation. In B. M. Goldman & D. L. Shapiro (Eds.), The psychology of negotiations in the 21st century workplace: New challenges and new solutions (pp. 293–324). New York: Routledge/Taylor & Francis Group.Find this resource:

Kennedy, J. A., & Kray, L. J. (2015). A pawn in someone else’s game? The cognitive, motivational, and paradigmatic barriers to women’s excelling in negotiation. Research in Organizational Behavior, 35, 3–28.Find this resource:

Kolb, D. M. (2009). Too bad for the women or does it have to be? Gender and negotiation research over the past twenty-five years. Negotiation, 25(4), 515–531.Find this resource:

Kray, L. J., & Thompson, L. (2004). Gender stereotypes and negotiation performance: An examination of theory and research. Research in Organizational Behavior, 26, 103–182.Find this resource:

Niederle, M. (2016). Gender. In J. H. Kagel & A. E. Roth (Eds.), The handbook of experimental economics (Vol. 2, pp. 481–553). Princeton, NJ: Princeton University Press.Find this resource:

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Notes:

(1.) Cognitive traits are the abilities of humans to process information and carry out any task independently of its difficulty or situational frame. They include attention, working memory, and anticipation. In contrast, non-cognitive skills are related to other factors that determine behavior and are independent of cognitive skills. In short, people with identical cognitive skills will perceive a situation in the same way but may face it differently because of differences in non-cognitive skills (e.g., risk tolerance).

(2.) In a somewhat different fashion, Blackaby, Booth, and Frank (2005) observe, based on data on U.K. economic scholars collected by the Royal Economic Society, that having outside options has a positive impact on earnings for men but not for women. This could be “consistent with a lower willingness of females to bargain or negotiate” (Stevens & Whelan, 2019, p. 144) or with lower bargaining power among women.

(3.) The paper does not provide the figure for men directly but it provides the figures for women (24%) and for the full sample (35.5%). Given that the proportion of men to women in the sample is 48%/52%, approximately 50% of men must have bargained.

(4.) A meta-analysis by Kugler et al. (2018) finds that, overall, men are one and a half times more likely to enter into bargaining processes than women. Importantly, they also show that the older the study is, the greater the reported gender difference in the propensity to negotiate. This is seen by the authors as evidence that “female and male gender roles have become more aligned over time” (p. 213).

(5.) The power-to-take game consists of two parties: an authority and a responder. The responder has an endowment of which the authority can decide to take a portion. After learning the take-rate by the authority, the responder can destroy a portion of the endowment. This reduced endowment is the base for calculating payoffs. The payoff of the authority is the taken portion of this reduced endowment while that of the responder is the rest. Thus, the power-to-take game can be thought of as a continuous version of the ultimatum game, which is an all-or-nothing game.

(6.) In the words of the authors themselves, “[T]he number of studies in this moderator analysis is relatively small. Such a situation increases the likelihood that second order sampling error is in operation and decreases the statistical power to detect significant relationships. Second order sampling error would exist if the observed studies are not representative of the population of all possible studies investigating the same relationship and could lead to an over- or underestimate of the between-study variance. For this reason, the following moderator analyses should be considered exploratory in nature.”

(7.) In particular, Bowles et al. (2007) show that female candidates suffer a greater backlash than male candidates for initiating bargaining, but only from male evaluators. In addition, study 3 in the same paper shows that women who bargain are perceived as less nice and more demanding. However, feelings of backlash do not affect this relationship. Meanwhile Kulik and Olekalns (2012) propose a theoretical framework based on the stereotype content model and expectancy violation theory to explain why women suffer backlash.

(8.) Walters et al. (1998) also carry out an analysis of moderator factors for gender differences. They observe that gender differences in competitive attitude are greater under explicit bargaining situations than in matrix situations such as the prisoner’s dilemma. The meta-analysis returns some other significant moderators, but the analysis is carried out only for matrix games, so we do not discuss them here.