For the study, the researchers matched people in pairs, with one representing the employer and one the worker. At the start, the workers contributed either $20, $15, or $10 to a pot of money (the amount was determined by their performance on a math problem), and the firms contributed either $25 or $20. The researchers randomly assigned a “default wage” for the worker—either $4 less than they contributed, $2 less, exactly what they contributed, or $2 more.
The worker-employer teams were entered into one of two types of negotiations, all performed over instant message without revealing age, name, or gender. In the first condition, the worker could choose whether to negotiate their salary, and in the second, they had to negotiate, even if they didn’t particularly want to. Either way, they knew both parties would be penalized $5 if they failed to reach an agreement.
Both genders were more likely to choose to negotiate when their “suggested wage” was $4 less than their contribution—in other words, when they stood the most to lose from not negotiating. When they were forced to negotiate, men and women didn’t differ in their success, with both male and female workers netting a gain of about $0.66.
When given the choice, though, the female participants didn’t opt to negotiate as often as the men did. That might at first seem to support the idea that “women don’t ask” for more money or better benefits, and that’s why they don’t receive them.
But the data from the “choice” condition revealed what was really going on: Women were avoiding the negotiations they knew would not end well for them. The likelihood of women losing money tripled if they were forced to negotiate, rather than given the option. “By opting out of negotiations, women are avoiding substantial financial losses,” the study authors write. “That is, women know when to ask.”
Unlike women, men were not particularly likely to opt out of negotiations that they would probably lose. Thus, being forced to negotiate was neither bad nor good for the men, but it was bad for women, says Christine Exley, an assistant professor at Harvard Business School who co-authored the study along with Muriel Niederle of Stanford University and Lise Vesterlund at the University of Pittsburgh.
We don’t know from the study why this happened. Did the men like negotiating a little too much? Were the women more psychologically attuned to the potential costs and benefits? Since the “firm” participants couldn’t discern the gender of the negotiator, the typical explanations for gender disparities, like the backlash effect or the double bind, are ruled out here. Catherine Eckel, a behavioral economist at Texas A&M University who was not involved in the study, said the study suggests one reason for women’s success in negotiating in the real world could be that the ones who negotiate are the ones who are already good at it. Those who aren’t, don’t, and if they were forced to, they wouldn’t necessarily nab the same career gains.