Gender differences in judgment and decision-making: can they explain why we have so few female CEOs? Michał Krawczyk University of Warsaw August PDF

Gender differences in judgment and decision-making: can they explain why we have so few female CEOs? Michał Krawczyk University of Warsaw August 2016 Risk taking It is risky to go for the top position

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Gender differences in judgment and decision-making: can they explain why we have so few female CEOs? Michał Krawczyk University of Warsaw August 2016 Risk taking It is risky to go for the top position Females usually found to be more risk-averse in choices between monetary lotteries in the lab (see review by Charness and Gneezy, 2012) The gap is reported to be largest in whites (Finucane et al., 2000) (Single) females usually found to make more risk-averse investment choices (Sunden and Surette s, 1998). Why differences in risk-taking? They could reflect our evolutionary past size of parental investment hunters vs. gatherers Dreber and Hoffman (2007): 2d/4d (a proxy for prenatal testosterone) correlates with financial risk aversion Why differences in risk-taking? Emotions matter in risk-taking They may make us deviate from the normative benchmark of expected utility theory (Rottenstreich and Hsee, 2001) women tend to experience emotions more strongly in some situations men tend to experience anger, while women experience fear (Lerner et al., 2003) (Perhaps related to defining a situation as a challenge vs. as a threat, Arch, 1993) Overconfidence Compared to people of your age, are you a betterthan-average or a worse-than-average driver? What is the length of the Nile? Give a 90% confidence interval. Let us go big. And real. Boys will be boys (Krawczyk and Wilamowski, JBDM, 2016) Participants of the 2012 Warsaw Marathon asked to predict their finishing times We looked at the difference between the actual and predicted time in seconds (forecast errors) Large, positive values mean you run much slower than you thought you could (possibly because you were overly confident in your prediction) It turns out that forecast errors are significantly higher for males compared to females. Split times If you are overconfident, you probably start too fast (and then Tekst you prezentacji have to slow down considerably) In particular, consider the following measure: APC=final time-2(time at 21st km) High values correspond to relatively slower pace in the latter half Correlations with forecast error close to.7(!) Thus APC is a good proxy for overconfidence Why not look at split times in other marathons? Data Chicago, New York, London 1million observations Age nations (with 100 observations) Gender and age effects National effects Indulgence Hofstede dimensions: results Specification (8) (9) (10) (11) Power Distance ** * --- Individualism Masculinity *** 0.044*** *** *** Uncert.Avoid *** ** L-T Orient United States of Confidence Differences in social preferences? If I take a top position, somebody else does not get it A standard Tekst economic prezentacji assumption is that everyone cares about her or his payoff only But experiments show it is not true Dictator game Ultimatum game Trust game Overall, very little evidence that females are generally less selfish They seem to respond relatively strongly to social clues, relatively less to monetary incentives (cost of giving) Differences in willingness to compete Suppose you were make additions, as many as you can, for three minutes =?, 84+19=? You can choose between two methods of payment: You get 50 cents for each correct calculation You get 2 euro for each correct calculation if you are the best in a group of four Which one would you prefer and why? Gender gap in competitions In situations like the one just described, men are typically Tekst found prezentacji to be more likely to choose competition than women (see papers by Niederle and Vesterlund) There is some evidence that women chiefly dislike competing against men. Some rationale for same-sex schools (Booth and Nolen, 2012, JEBO) ``Women don t ask by Babcock and Laschever Men also tend to do relatively well when actually competing under winner-takes-all as compared to their performance under piece-rate (see papers by Gneezy and Rustichini) Why are women less willing Probably nature matters to compete? Sutter and Rutzler (2010): gender gap in competitiveness already in three-year olds Chen, Katuscak and Ozdenoren (2009): menstrual cycle affects auction bidding behavior Nurture matters Maasai vs. Khasi (Gneezy, Leonard and List, 2006; see also ``The Why axis ) Women risk more backlash for starting competitive negotiations (Bowles, Babcock, and Lei Lai, 2007) Summary It takes self-confidence, self-love, willingness to take risk, willingness Tekst prezentacji to compete and good performance when competing to reach a top position ON AVERAGE women are less confident, more riskaverse, more competition-averse, and perform relatively poorly under competition Conclusion: the fraction of women in top positions may be low even if hiring/promotion process treats both genders completely equally Corollaries: male overconfidence may also lead to epic failures; it cannot help explain gender wage gap
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