On the cultural basis of gender differences in negotiation

Abstract

We study how culture and social structure influence bargaining behavior across gender, by exploring the negotiation culture in matrilineal and patriarchal societies using data from a laboratory experiment and a natural field experiment. One interesting result is that in both the actual marketplace and in the laboratory bargaining game, women in the matrilineal society earn more than men, at odds with years of evidence observed in the western world. We find that this result is critically driven by which side of the market the person is occupying: female (male) sellers in the matrilineal (patriarchal) society extract more of the bargaining surplus than male (female) sellers. In the buyer role, however, we observe no significant differences across societies.

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Notes

  1. 1.

    For a more extensive discussion on the Khasi society please see Gneezy et al. (2009).

  2. 2.

    This allows us to observe the initial demands by both parties.

  3. 3.

    The experiments we ran involved two other treatments, which implemented the bargaining game explained above with subjects bargaining on behalf of a team of two people rather than themselves only.

  4. 4.

    There were no statistically significant differences across society in the propensity to delegate, either within men or women.

  5. 5.

    Tomatoes were available in a very limited range of quality since one type of tomatoes was sold in the market. The tomatoes were sold in several different degrees of ripeness, and the agents were told to purchase a ripeness degree locally called a “2-day” tomato. Purchases were monitored, and failure to buy the right type of tomatoes would result in purchase not being paid for. This did not happen.

  6. 6.

    In our data, 65 sellers and 1 buyer have initial offers larger than 150, the total surplus. These observations come predominantly from the patriarchal villages (44 observations), where a subset of the villagers did not speak the language used in the instructions and had to have the instructions explained by the research assistants in their own dialect. There could be two potential reasons for why this behavior is observed mainly for sellers. First, if the seller subjects were not clearly made aware that buyers had a valuation of 150, they might start with higher offers than 150 (omission of this information, letting sellers know about the buyers’ valuation, is more likely than buyers not knowing their own valuation or sellers not knowing their own cost). Another possibility is that if sellers try to signal “toughness” by making an offer that exceeds the pie (although this has no chance of being accepted), we could observe offers exceeding 150. Since we cannot be sure of the true reason, we exclude these observations in our analyses but present related robustness checks. Our main data analyses therefore use 254 observations.

  7. 7.

    There may be multiple reasons why role may matter in an alternating-offer bargaining setup such as the one we implement. For example, sellers may be prone to loss aversion, in which case we would expect them to demand a higher surplus and be more reluctant to back down. In the market, it may also be that there is asymmetric information about the quality of the product between the buyer and the seller, which could lead sellers to gain a larger share of the surplus. While these factors are less likely to be relevant in our stylized, symmetric bargaining game in the lab experiment, they could still matter if subjects bring over insights from their field experiences to the lab. This is particularly relevant for our results based on gender/society, since there is selection on gender and ethnicity into market roles.

  8. 8.

    If we include the include subjects whose initial offers are larger than 150 but who did not initiate the bargaining we get very similar results. In particular, females in the matrilineal society earn on average 58.2 and males 38.7. This difference is statically significant (Mann–Whitney rank-sum test, p = 0.002), whereas there is no significant difference in the patriarchal society, where females earn on average 49.1 and males 47.6. Considering market role, matrilineal male sellers earn significantly less than matrilineal female sellers (86.4 vs. 65.6, p = 0.02). There is no significant difference across gender for buyers in either society.

  9. 9.

    Recall that we collect initial offers for all subjects independently of whether they actually start the bargaining.

  10. 10.

    The analysis of desired surplus requires that the total surplus sums to 150. Therefore, it is important to exclude the initial offers larger than 150. Recall that most of these offers are made by subjects in the seller role. Looking at those offers exclusively, we see no significant difference between the desired surplus of males and females in either society.

  11. 11.

    For the patriarchal society, males in the seller role demand significantly more of the surplus than females in the same role using a Wald test for model 1 (2 and 3) in Table 2, with p = 0.0003 (0.0003 and 0.0035, respectively). The following tests are also coherent with the simple ranksum tests, when using standard tests of the coefficients in the regression.

  12. 12.

    Likewise, there is no difference in rejection rates of offers made by buyers in either society. However, male buyers in the matrilineal society reject offers more.

  13. 13.

    We get similar results if we include the subjects whose initial offers are larger than 150. Note that in the analysis of rejecting first offers, it would not make a difference to include subjects whose first offers are higher than 150 and started the bargaining, as these subjects are not faced with an accept/reject decision. Similarly, in the analysis of “being rejected”, it is irrelevant to consider the subjects whose initial offers are higher than 150 and did not start the bargaining in the analysis but did not start the bargaining, as these subjects’ offers do not reach the other party. In the patriarchal society, males and females’ rejection frequencies are not significantly different (p = 0.22 in a two-sided test of proportions). In the matrilineal society, males reject first offers more than females do (p = 0.003 in a two-sided test of proportions). As expected, all the 29 subjects that started the bargaining and whose initial offers were larger than 150 had their initial offers rejected.

  14. 14.

    Out of the 160 pairs in the whole sample, 46 pairs (29%) got their bargaining terminated due to the throw of the die, ending with zero surplus.

  15. 15.

    The insignificance is likely due to reduced number of observations used in this particular analysis, because we exclude first and second offers that exceed 150. Including these offers does not change the direction of the results.

  16. 16.

    In fact, the surplus difference between men and women goes away if failed bargains are excluded.

  17. 17.

    This result may be either due to the unwillingness of the Khasi female sellers to move their sale price down, or due to the reluctance of the buyers to attempt to negotiate with a Khasi female.

  18. 18.

    None of the buyer characteristics are significant, nor are the controls on sales sequence within shops. Potentially we could allow for further controls on the interaction of gender and ethnicity between selling and buying side. But given the number of observations within each of such combinations, coefficients would be hard to disentangle from a few single sales.

  19. 19.

    In fact, there is research that shows that the mode of communication (face-to-face vs. non-face-to-face) and anonymity can crucially affect negotiation outcomes, with anonymous and non-face-to-face communication often leading to less “integrative” outcomes (e.g. Stuhlmacher and Citera 2005).

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Acknowledgements

We would like to thank participants at the 2012 Latin American Meeting of the Econometric Society for helpful comments. Andersen is grateful to the Danish Social Science Research Council for financial support through Project 11-104456 and the European Research Council for financial support through Project 639383. Ertac thanks the European Commission (IRG, FP-7 239529) for generous financial support.

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Correspondence to Steffen Andersen.

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Andersen, S., Ertac, S., Gneezy, U. et al. On the cultural basis of gender differences in negotiation. Exp Econ 21, 757–778 (2018). https://doi.org/10.1007/s10683-017-9547-y

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Keywords

  • Gender
  • Bargaining
  • Field experiments
  • Culture

JEL Classification

  • C93
  • D03
  • J16