Yan Chen, Peter Katuscak and Emre Ozdenoren ask an interesting question: Why Can't a Woman Bid More Like a Man? (PDF). No, this paper is not about My Fair Lady (or Pygmalion, for that matter). It's about menstruation and the gender pay gap.
There is a small but growing body of evidence that women in the workforce are, on average, more risk averse and less likely to bargain (or to ask for pay rises) than men. See for example the book Women don't ask: Negotiation and the gender divide by Linda Babcock and Sara Laschaver, and the paper by Deborah Small, et al: Who goes to the bargaining table? Understanding gender variation in the initiation of negotiations (PDF). Might there be a biological explanation for this? The paper by Chen, etal, suggests there is. Here is the abstract:
We find systematic evidence that demographic characteristics, especially gender, race and the number of siblings, education backgrounds, as well as menstrual cycle, significantly affect bidder behavior in the first and second-price sealed-bid auction in the laboratory. In particular, we find that women bid significantly higher than men in the first-price auction, while the likelihood of dominant strategy play in the secondprice auction is not different between men and women.
This finding provides support for the hypothesis that risk attitude rather than cognitive ability is the main driving force for the gender gap in competitive environments. At a biological level, we find that, in the first-price auction, during menstruation, when levels of estrogen and progesterone are the lowest, women do not bid differently from men. The gender difference in the first-price auction is driven by women during other phases of the menstrual cycle with higher levels of estrogen and progesterone.
One can expect howls of protest from some quarters when these findings become more widely known. But even if women's risk aversion and bargaining account for some part of the gender earnings gap, no one would argue that they account for all of it.
I expect cross-national surveys to find significant variation between countries on women's propensity to bargain, suggesting an important role for culture and education as well as for biology. There is nothing stopping women from being encouraged and educated to bargain harder. Indeed, that may be easier to achieve than overcoming direct sex discrimination and prejudice.
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