Knowing when To Ask the Cost of Leaning in Article Analysis Prompt is attached, word limit is 900. Steps: 1. Read “Knowing When to Ask: The Cost of Leani

Knowing when To Ask the Cost of Leaning in Article Analysis Prompt is attached, word limit is 900.

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1. Read “Knowing When to Ask: The Cost of Leaning In”. Also read the Harvard

Business Review summary of the paper here: https://hbr.org/2016/04/women- who-dont-negotiate-their-salaries-might-have-a-good-reason 2. Critically evaluate the paper. This should involve each of the following.

• In one or two paragraphs, briefly summarize the paper’s primary conclusion and the evidence they use to support their hypothesis.

• Assess whether the paper’s empirical results do and do not support the author’s findings. What other potential explanations are there for the empirical patterns uncovered by the authors?

• Assess whether the paper’s empirical results are externally valid. That is, to what extent can the empirical results of this paper be extrapolated to other settings? Explain your reasoning. 3. Talk to 2 people who have worked for at least 5 years—people you know well enough to have a conversation about wage negotiations. Discuss with each of these people if they have negotiated their wages, and why or why not; if applicable, discuss also their experiences negotiating their wages. Do their experiences match the claims and assumptions made in the paper? How and/or how not? What does this suggest about the paper’s methodology, conclusions, and/or assumptions? Choose the most interesting points of critique or analysis of the paper that emerge from this to present in the final paragraph of your paper.

4. Revise your draft.

• Check: does each paragraph express one clear idea? Do you tell the reader what that idea is in a topic sentence?

• To make sure that your writing is concise and clear, take a word count of each paragraph, and then cut 10% of the words.

• Print your draft and read it out loud to help you identify spots where the language or ideas could be clearer. Knowing When to Ask:
The Cost of Leaning-in
Christine L. Exley, Muriel Niederle, and Lise Vesterlund
?
October 17, 2018
Abstract
Women’s reluctance to negotiate is often used to explain the gender wage gap, popularizing the push for women to “lean-in” and negotiate more. Examining an environment
where women achieve positive profits when they choose to negotiate, we find that increased
negotiations are not helpful. Women know when to ask: they enter negotiations resulting
in positive profits and avoid negotiations resulting in negative profits. While the findings
are similar for men, we find no evidence that men are more adept than women at knowing
when to ask. Thus, our results caution against a greater push for women to negotiate.
Keywords: gender; negotiations; leaning-in; selection
1
Introduction
Should women negotiate their salaries more often? According to 75% of adults recently surveyed in the United States, the answer is simply yes.1 The belief that women should negotiate
more is also reflected in the popular push for women to “lean-in” (Sandberg, 2013).2 Indeed,
concern that women’s negotiation decisions contribute to the wage gap has motivated a large
academic literature on what factors influence women’s negotiation decisions. For instance, building on past research (e.g., Babcock and Laschever, 2003), the literature on negotiation decisions
?
Exley:
Harvard Business School, clexley@hbs.edu; Niederle:
Stanford University and NBER,
niederle@stanford.edu; Vesterlund: University of Pittsburgh and NBER, vester@pitt.edu
1
Results from a Google Consumer Survey (February 2017, n = 202) that asked “Do you think women should
negotiate their salaries more often?” (no/yes). Another Google Consumer Survey (February 2017, n = 201) that
instead asked about men found that 54% responded yes to men negotiating more often.
2
While we focus on whether women should “lean-in” to negotiate more, related questions include whether
women should lean-in by entering competitions more (Niederle and Vesterlund, 2007, 2011), entering challenging
tasks more (Niederle and Yestrumskas, 2008), guessing more (Baldiga, 2014), or contributing their ideas more
(Coffman, 2014).
includes recent observational evidence (Card, Cardoso and Kline, 2016), laboratory studies (Dittrich, Knabe and Leipold, 2014) and field experiments (Leibbrandt and List, 2015).3
The push for women to negotiate more, however, is often accompanied by a caution: 66% of
adults recently surveyed in the United States report that women may lose from negotiating their
salaries more.4 The potential loss from negotiations can take many forms. Negotiations may
instill immediate costs in the form of opportunity costs of time or disutility from negotiations
themselves. They may give rise to future costs in the form of backlash (Bowles, Babcock and
Lai, 2007; Tinsley et al., 2009; Amanatullah and Morris, 2010; Amanatullah and Tinsley, 2013),
damage to one’s reputation, or decreased chances of future negotiations being successful.5 Further
negotiation costs may be particularly large in the case of a negotiation impasse. For example,
failure to reach an agreement may reduce returns to future collaboration, result in legal costs,
or, in extreme cases, prompt the retraction of job offers or previous agreements.6
The low entry into negotiation by women and the possibility of both gains and losses raise the
question of whether women financially benefit from negotiating more. While vast, the literature
on gender and negotiation does not answer this question. The finding that women who negotiate
benefit from doing so does not imply that all women benefit from negotiating more. Selection may
play a role. To determine whether increased negotiations are financially beneficial to women, this
paper provides the first comparison of outcomes from a setting where individuals choose whether
to negotiate to the counterfactual outcomes from a setting where individuals always negotiate.
3
For additional evidence, see Stuhlmacher and Walters (1999); Bowles and McGinn (2008); Eckel, de Oliveira
and Grossman (2008); Bowles (2013); Azmat and Petrongolo (2014); Mazei et al. (2015); Bohnet (2016). Note that
a number of factors influence gender differences in negotiation outcomes such as the sex of negotiating partners
(Eckel and Grossman, 2001; Solnick, 2001; Bowles, Babcock and Lai, 2007; Sutter et al., 2009; Hernandez-Arenaz
and Iriberri, 2018b), the activation of stereotypes (Kray, Thompson and Galinsky, 2001; Kray, Galinsky and
Thompson, 2002), the availability of information on what others do or what is recommended (Bowles, Babcock
and McGinn, 2005; Rigdon, 2012), the beneficiaries of the negotiation (Bowles, Babcock and McGinn, 2005), the
extent to which the possibility for a negotiation is known (Small et al., 2007; Leibbrandt and List, 2015), the
framing of the situation as a negotiation or an ask (Small et al., 2007), the cultural context of the negotiations
(Andersen et al., 2013), the relative positional power in a negotiation (Andersen et al., 2013; Dittrich, Knabe
and Leipold, 2014; Greenberg and Petrie, 2015), the communication strategies or mode (Bowles and Babcock,
2013; Bowles, 2013; Greenberg and Petrie, 2015), the ability to signal valuations or experience (Castillo et al.,
2013; Busse, Israeli and Zettelmeyer, 2016), age (Chandra, Gulati and Sallee, 2017), and the existence of sharing
norms (Hernandez-Arenaz and Iriberri, 2018a). Gender differences in preferences, such as risk aversion or fairness
concerns, may also contribute to differences in negotiation outcomes. For survey papers on gender differences in
such preferences, see Croson and Gneezy (2009), Bertrand (2011) and Niederle (2016).
4
Results from a Google Consumer Survey (February 2017, n = 200) that asked “Do you think women can lose
from negotiating their salaries more often?” (no/yes/ sometimes yes, other times no). Another Google Consumer
Survey (February 2017, n = 203), that instead asked about men, found that 63% responded “yes” or “sometimes
yes, other times no.”
5
For explanations why women who negotiate are disliked, see e.g. http://www.today.com/money/womenasking-raise-damned-if-you-do-if-you-dont-2D11658374.
6
Examples of such extreme cases include a woman’s job offer as an assistant professor being retracted after trying to negotiate (http://www.newyorker.com/science/maria-konnikova/lean-out-the-dangersfor-women-who-negotiate) and a consultant who was fired after asking for a pay raise for a promotion
(http://www.cbsnews.com/news/can-you-be-fired-for-asking-for-a-raise).
2
We conduct laboratory experiments that abstract away from factors that are known to induce gender differences in more complex negotiations. This abstraction allows us to study the
negotiation decisions themselves. Participants are anonymous to mitigate fear of discrimination
or backlash. To limit ambiguity, they encounter explicit negotiation opportunities and decisions.
Participants are informed of what they bring to the table to ease concerns related to lacking confidence. They are informed of their outside options to make the potential loss of a negotiation
clear. Whether participants can avoid negotiations, however, varies across our two treatments.
Participants in our Choice treatment can choose to avoid a negotiation opportunity and instead
receive an outside option. By contrast, participants in our Always treatment must always enter
negotiations.
When women choose to enter negotiations in the Choice treatment, they largely gain from
doing so. We nonetheless replicate the common finding that women frequently avoid negotiations.
While this has been seen as evidence that an increase in negotiations will secure improvements
for women, we find, from the counterfactual of women always negotiating, that there are no gains
from increased negotiations. When given a choice, women already enter negotiation opportunities
that result in gains. They only avoid negotiation opportunities that would have otherwise resulted
in losses. Increased negotiations are not helpful to women; in fact, they are harmful. Forcing
women to negotiate hurts them.
In considering the outcomes among men, we further show that increased negotiations do not
result in relatively better outcomes for women than they do for men. Examining the selection
into negotiations provides a similar takeaway. When comparing the financial outcomes from
“self-selected” negotiations that workers choose to enter in the Choice treatment to those from
“non-self-selected” negotiations in the Always treatment, it is clear that women know when to
ask and men are not more adept at knowing when to ask than women are.
Put differently, our paper cautions against targeting lean-in advice towards women. This
caution is strengthened by findings from two additional experiments. First, while the initial
laboratory experiment was conducted at Stanford University with 292 participants, we replicate
our initial study at the University of Pittsburgh using a larger sample of 398 participants. Second, we conduct an online experiment that provides incentive compatible evidence of a greater
paternalistic demand to eliminate a worker’s ability to avoid a negotiation if the worker is female
rather than male.
Our paper first reports on our initial laboratory experiment conducted at Stanford University:
with the corresponding details for the design in Section 2, the data in Section 3, and the results
in Section 4. In Section 5, we discuss our replication conducted at University of Pittsburgh. In
Section 6, we present the evidence on the third-party demand for increased negotiations from an
online experiment. In Section 7, we discuss extensions and limitations of our results as well as
potential implications on recommendations for helping women to negotiate.
3
2
Design
We create a negotiation environment, using Ztree (Fischbacher, 2007), where participants can
compose free-form arguments for their point of view and can separately generate official proposals which the opposing side can accept at any time. Participants are evenly split between firms
and workers at the beginning of sessions of each treatment. They remain in their randomly assigned role throughout the session. Participants face two blocks of five negotiation opportunities.
Each block is preceded by one performance round that determines the individual contribution a
participant brings to each of the subsequent five negotiation opportunities. For each negotiation
opportunity, participants are randomly matched into worker-firm pairs with joint revenues equal
to the sum of the worker contribution and the firm contribution. The computer generates a
random suggested wage that correlates with the worker contribution. Workers in the Choice
treatment can decide to enter into a negotiation with the firm or to forgo the negotiation by
accepting the suggested wage. Workers in the Always treatment enter negotiations while still
observing the suggested wage. All negotiations concern the share of joint revenue the worker
receives as a wage. Negotiations that fail to reach an agreement result in the suggested wage
being implemented along with a five-dollar impasse penalty for both the worker and the firm.
Appendix B contains the instructions given to participants. These instructions include information on workers and firms as well as screenshots of how negotiations take place. Instructions
are read out loud to guarantee that the structure of the experiment is common information.
Before turning to the description and motivation for each design element, we note that our design purposefully limits three channels that have been shown to generate gender differences in
negotiations.7 First, individuals know their individual contributions to prevent gender differences in confidence about what one brings to the table (Niederle and Vesterlund, 2007; Mobius
et al., 2014). Second, negotiations are anonymous to reduce potential fears of backlash among
women in particular (Bowles, Babcock and Lai, 2007; Tinsley et al., 2009; Amanatullah and
Morris, 2010; Amanatullah and Tinsley, 2013). Third, the negotiation opportunity is explicit to
reduce the potential for gender differences arising from uncertainty about whether a negotiation
is possible (Small et al., 2007; Leibbrandt and List, 2015).
Individual Contributions and Joint Revenue
Participants perform a five-minute real-effort task at the beginning of each of the two negotiation blocks. Their performance determines their individual contribution for the subsequent five
rounds of negotiation opportunities in that block. A worker’s contribution is $20, $15 or $10,
depending on whether the worker’s performance is the highest, second highest or third highest
when compared to two other randomly selected workers. A firm’s contribution is $25 or $20,
7
To examine whether increased negotiations are beneficial to women, we sought to design an environment
where negotiations are generally profitable for women. Showing that increased negotiations are not helpful to
women in an environment where women rarely do well in negotiations would be less informative.
4
depending on whether the firm’s performance is the highest or second highest performance when
compared to one other randomly selected firm. Any performance ties are broken randomly, and
all participants are informed that this process determines contributions. In the first block, the
real-effort task is to calculate the sum of five two-digit numbers. In the second block, the task is
to count the number of zeros in a table with ten rows and five columns of zeros and ones (i.e.,
one row may appear like “00101”). Since participants’ relative performances may vary across
the two tasks, their individual contributions may vary across the two blocks. After learning their
individual contributions for a block, participants face five rounds of negotiation opportunities.
In each round, a firm and a worker are randomly paired, and the joint revenue is the sum of the
worker and firm contributions.
By making contribution levels not depend linearly on performances and instead imply a set
of contribution levels, we ensure that variation in individual contribution levels can be easily explained. The variance in individual contribution levels also generates multiple focal points of the
negotiation. In addition to arguing for “equal splits” where the joint revenue is split 50-50, individuals may argue for “equity splits” where the joint revenue is split proportionally according to
their individual contributions. The potential insistence on equity splits may result from individuals feeling entitled to their contribution and seeing it as the relevant reference point, particularly
since individual performances determine individual contribution levels (Konow, 2000).8
On the other hand, the highest contribution level of the worker equals the lowest contribution
level of the firm, which may help workers justify requests that exceed their individual contribution
levels.9
The firm is always informed of the worker contribution. Whether the worker is informed of
the firm contribution depends on the study version. In a common information version, the worker
is informed of the firm contribution. In a private information version, the worker is not informed
of the firm contribution. This variation in information is motivated by the finding that women
often fare worse in negotiations that involve more ambiguity (see Bowles and McGinn (2008) and
Mazei et al. (2015) for reviews, or Leibbrandt and List (2015) for recent evidence). However,
perhaps given the anonymity and explicit choice to negotiate in our setting, this variation in
knowledge does not produce significantly different results.10 Our analysis will therefore not focus
on this variation and instead includes it as a control where relevant.
8
Feeling entitled may influence individuals’ decisions as shown in Hoffman et al. (1994) and discussed more
broadly in Engel (2011). Since much of this work examines dictator games, it is interesting to note that Demiral
and Mollerstrom (2018) do not find evidence for an entitlement effect in ultimatum games.
9
See Konow, Saijo and Akai (2016) for a discussion on “equality” and “equity” principles of fairness. The
equity principle may also be referred to as being Libertarian (Alma?s et al., 2010). For earlier work showing that
multiple reference points and fairness principles can result in diverse negotiation outcomes see also Roth and
Murnighan (1982).
10
For instance, workers enter negotiations 72% of the time when there is private information and 69% of the
time when there is common information. We fail to reject the equality of the entrance rates (p = 0.36) and the
equality of the average profit from negotiations of $1.31 vs $1.23 conditional on negotiations (p = 0.74).
5
Suggested Wage and Potential Payoffs
In the Choice treatment, a worker can choose to avoid negotiations by accepting a “suggested
wage.” The suggested wage for a worker equals the worker contribution plus a bonus that in each
round is randomly and uniformly drawn from the set -4, -2, 0, 2. While workers know that the
suggested wage is random, they do not know the details of the process. However, knowing their
own contribution levels, workers can determine the extent to which suggested wages differ from
their own contributions.
If a worker accepts a suggested wage, the firm receives the joint revenue minus the suggested
wage. If a worker instead enters a negotiation in the Choice treatment, or when a worker always
negotiates in the Always treatment, two payoff scenarios are possible. When an agreement is
reached, the worker receives the agreed upon wage and the firm receives the remainder of the
joint revenue. When an agreement is not reached, the suggested wage is implemented along
with a five-dollar impasse penalty for both the worker and firm. That is, the worker receives the
suggested wage minus five dollars, and the firm receives the joint revenue minus the suggested
wage minus five dollars. Table 1 summarizes these potential payoffs. One round from each block
is randomly selected for payment.
Table 1: Worker Payoffs (W) and Firm Payoffs (F)
No Negotiation
Negotiation
Agreement
Negotiation
Impasse
Choice treatment
Always Treatment
W = suggested wage
N/A
F = joint revenue – suggested wage
W = agreed upon wage
F = joint revenue – agreed upon wage
W = suggested wage – $5
F = joint revenue – suggested wage – $5
W indicates the payoff for the worker, and F indicates the payoff for the firm. In the Choice treatment, a
worker may decide to accept the suggested wage and thus not enter a negotiation. The resulting payoffs
are shown in the No Negotiation row. Alternatively, a worker may choose to reject the suggested wage
and enter a negotiation. Payoffs when an agreement is reached are shown in the Negotiation Agreement
row, while payoffs when an agreement in not reached are shown in the Negotiation Impasse row. In the
Always treatment, workers always enter negotiations so only these latter two payoffs are relevant.
The suggested wage serves as a focal point for negotiations, as agreed upon wages should fall
within $5 of the suggested wage. Outside of the resulting $10 range for a given suggested wage, a
payoff dominant strategy – for either the worker or the firm – would instead involve a negotiation
impasse which implements the suggested wage with the $5 penalty. Assuming risk neutrality, the
suggested wage indeed corresponds to the symmetric Nash Bargaining Solution since it results –
with a symmetric $5 penalty – from an impasse. There are thus three potential focal points for
negotiations: the equal split, the equity split, and the symmetric Nash Bargaining Solution (i.e.,
implementing the suggested wage).
6
In varying the extent to which …
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