Submission 148
Bargaining Through the Gap: The Role of Confidence on Bargaining
P4-G08-04
Presented by: Enya Turrini
The gender wage gap persists in many countries, with the UK reporting a 7.7% disparity as of April 2023 (ONS, 2023). While human capital characteristics, marital, and parental statuses explain part of the gap, other factors like occupational segregation, underrepresentation in high-level jobs, and gendered expectations also play a significant role (Blau & Kahn, 2017; Wiswall & Zafar, 2018).
One key but underexplored factor is wage negotiation behavior. Studies suggest women negotiate wages less often, exacerbating pay disparities (Exley et al., 2020; Recalde & Vesterlund, 2020). Institutional measures like salary history bans and pay transparency have shown potential but may not always be applicable due to legal and contextual differences (Baker et al., 2023; Agan et al., 2021). Individual-focused interventions, such as negotiation training, have had mixed results, as women may face backlash or personal costs when they negotiate (Recalde & Vesterlund, 2020). "Lean-in" approaches have also yielded contrasting results, with some women preferring to avoid wage negotiation altogether (Exley et al., 2020).
Women’s lower engagement in bargaining may stem from various factors, including risk aversion, perceived personal costs, and lower confidence in their abilities. This study investigates whether confidence influences women’s willingness to negotiate wages. Specifically, it examines whether boosting confidence can reduce gender pay gaps in initial job negotiations.
The study employs an experimental design simulating real-world bargaining scenarios. Participants first complete a mathematical task—summing five two-digit numbers within a time limit—similar to Niederle & Vesterlund (2007). Their performance determines whether they are classified as High (H) or Low (L) performers based on relative ranking. Next, participants' confidence levels are measured. The treatment group receives feedback on whether they are H or L performers, though exact performance details are withheld. The control group receives no feedback.
A bargaining game under asymmetric information follows, inspired by Grossman & Perry (1986). Here, an employer-bot, aware of participants' performance, makes initial wage offers. Participants can accept, reject, or counteroffer, with the bot deciding whether to accept counteroffers based on the increment proposed. Finally, a post-experiment survey collects demographic information, risk preferences, Big Five personality traits, and personal norms regarding bargaining.
The study tests several hypotheses: (i) women negotiate differently than men, (ii) performance feedback influences confidence and subsequent bargaining behavior, (iii) H and L performers adopt distinct bargaining strategies, and (iv) gender and confidence interact to shape negotiation outcomes.
Findings from this study could inform policies aimed at reducing the gender pay gap. Potential interventions include confidence-building programs in professional training, improved performance feedback transparency, and workplace bargaining structures designed to minimize biases. These insights have implications for both academic research and practical policy development.
One key but underexplored factor is wage negotiation behavior. Studies suggest women negotiate wages less often, exacerbating pay disparities (Exley et al., 2020; Recalde & Vesterlund, 2020). Institutional measures like salary history bans and pay transparency have shown potential but may not always be applicable due to legal and contextual differences (Baker et al., 2023; Agan et al., 2021). Individual-focused interventions, such as negotiation training, have had mixed results, as women may face backlash or personal costs when they negotiate (Recalde & Vesterlund, 2020). "Lean-in" approaches have also yielded contrasting results, with some women preferring to avoid wage negotiation altogether (Exley et al., 2020).
Women’s lower engagement in bargaining may stem from various factors, including risk aversion, perceived personal costs, and lower confidence in their abilities. This study investigates whether confidence influences women’s willingness to negotiate wages. Specifically, it examines whether boosting confidence can reduce gender pay gaps in initial job negotiations.
The study employs an experimental design simulating real-world bargaining scenarios. Participants first complete a mathematical task—summing five two-digit numbers within a time limit—similar to Niederle & Vesterlund (2007). Their performance determines whether they are classified as High (H) or Low (L) performers based on relative ranking. Next, participants' confidence levels are measured. The treatment group receives feedback on whether they are H or L performers, though exact performance details are withheld. The control group receives no feedback.
A bargaining game under asymmetric information follows, inspired by Grossman & Perry (1986). Here, an employer-bot, aware of participants' performance, makes initial wage offers. Participants can accept, reject, or counteroffer, with the bot deciding whether to accept counteroffers based on the increment proposed. Finally, a post-experiment survey collects demographic information, risk preferences, Big Five personality traits, and personal norms regarding bargaining.
The study tests several hypotheses: (i) women negotiate differently than men, (ii) performance feedback influences confidence and subsequent bargaining behavior, (iii) H and L performers adopt distinct bargaining strategies, and (iv) gender and confidence interact to shape negotiation outcomes.
Findings from this study could inform policies aimed at reducing the gender pay gap. Potential interventions include confidence-building programs in professional training, improved performance feedback transparency, and workplace bargaining structures designed to minimize biases. These insights have implications for both academic research and practical policy development.