A Model of When to Negotiate

Linda Babcock, Hannah Riley Bowles and Julia Bear

in The Oxford Handbook of Economic Conflict Resolution

Published in print September 2012 | ISBN: 9780199730858
Published online December 2012 | | DOI:

Series: Oxford Handbooks

 A Model of When to Negotiate

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  • Economics
  • Microeconomics
  • Econometrics and Mathematical Economics


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This article reports a model explaining previously identified gender differences in negotiation and generating new and testable insights. It specifically addresses how prescriptive gender stereotypes affect evaluators' perceptions of an employee who negotiates for higher compensation and how they influence negotiators' subjective experience of asking for higher pay. Immediate salary gains from the negotiation, the long-run reputation costs of negotiating, and the effect of negotiating on one's self-image may help to explain why it might be rational for women to be more reticent than men about bargaining for higher pay. The reputation costs of negotiating may depend on the norms in the local environment. Decreased status in the workplace constrains men's propensity to negotiate. The two-period model articulates the conditions necessary for increasing the likelihood that women will negotiate and suggests that finding mechanisms such as focal points or “calls to action” can help women to coordinate around negotiating.

Keywords: gender differences; negotiation; gender stereotypes; evaluators; compensation; bargaining; reputation costs; two-period model

Article.  8303 words. 

Subjects: Economics ; Microeconomics ; Econometrics and Mathematical Economics

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