Final exam！
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BehaviourinEconomicsituations1.pptxDoes economic behaviour differ by gender? (and, if so, why do we care?)
Eswaran ch. 2
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Note: gender versus sex
Sometimes used interchangeably
“sex” refers to biology, “gender” to culture
Distinction may be clear in theory (or not), but in practise, when trying to sort out roots of different behaviours, the two are difficult to disentangle.
I will try and keep them distinct, but it will not always be easy – or possible
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Why do we care if behaviour differs by sex (or gender)?
We observe differences in
i) labour markets: average wage rates, incomes, executive compensation, time spent in work at home,….
ii) product markets: prices paid for cars, dry-cleaning, haircuts….
iii) capital markets: availability of credit,…..
What is the source of each of these? Behaviour, or discrimination, or a mixture?
Are there implications for efficiency? Equity? Growth?
ECON 339: economic behaviour and gender (Eswaran ch 2)
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What differences have been observed, and in what contexts?
Primary source of recent data on behaviour - choices individuals make- is (economic) experiments
Two types of settings:
Labs
Social experiments – most common for development economists working with aid groups
Sometimes economists work with other social scientists – psychologists, sociologists, anthropologists, demographers
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Evidence from experiments
1. Ultimatum game (Solnick 2001):
Two players, one round
Sum of money to be split is S
Proposer suggests amount willing to give away (all it x) (without disclosing); responder suggests minimum they would accept (call it y) (without disclosure).
Payoffs: If x < y, both get zero;
If x=y or x > y, responder gets x, proposer gets (S-x).
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Results? Average offer was independent of the sex of proposer, but varied with the sex of responders
Proposers, both males and females, made lower offers to female responders than to male responders
Responders, both males and females, made higher demands if proposer was female than if proposer was male.
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Other experiments on variations of this game yield similar results
Why?
Women are expected to be more cooperative than men?
In sequential version, women accept offers more often than men….they are more cooperative?
In dictator game, females are more generous.
ECON 339: economic behaviour and gender (Eswaran ch 2)
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2. Social dilemma games
Prisoners’ dilemma?
General outcome: individually rational to always defect – dominant strategy.
Some evidence that women are more likely to cooperate than men are…at least initially.
Suggestion that men are more likely to cooperate, within own group, if there is intergroup competition.
(Intergroup competition does not seem to matter for women’s behaviour.)
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Prisoners’ Dilemma game
Simultaneous game: 2 players, 2 actions*
Player 2
left right
Player 1 Up (4,4) (8,2)
down (2,8) (6,6)
Convention: in each cell: 1st number is payoff to row player (Player 1 here); 2nd number is payoff to column player (Player 2 here).
*in simultaneous game, action = strategy
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Prisoners’ dilemma game
In many (most?) situations, the strategy choice that maximizes a player’s payoff depends on choice of other player
PD game: each player has a dominant strategy
- a choice that max’s own payoff, regardless of other’s choice
Here: Player 1 always better off choosing “up”, and
Player 2 always better off choosing “left”
Prediction for choices in one-shot game?
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Notice: payoffs in dominant strategy eq’m are (4,4)
If played (down, right), would obtain (6,6)
Both players would be better off if played (down, right), but this strategy combination is not individually rational – not an eq’m in a one-shot game.
So: properties of PD game:
dominant strategies
another pair of strategies yielding Pareto superior payoffs
ECON 339: economic behaviour and gender (Eswaran ch 2)
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3. Negotiation
Women more likely to negotiate harder on behalf of someone else (than for themselves)
Women are more altruistic than men are?
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Differences in behaviour (choices): because of preferences or constraints?
1. Competition
given a choice between a setting where payoff depended only on own performance – and not own performance relative to others’ – women more likely than men to choose the former in mixed sex groups.
But: this result different if women knew they would be competing only with other women.
But: in matriarchal society, women more likely to compete than men
ECON 339: economic behaviour and gender (Eswaran ch 2)
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2. Willingness to take on risk (Degree of risk aversion)
Some evidence that in financial markets women choose less risky portfolios
(Suggestion that had most traders been women, financial crisis of late 2000’s would have been less severe.)
ECON 339: economic behaviour and gender (Eswaran ch 2)
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Why these differences?
1. Preferences – attitudes are hard-wired, through evolution
Evolutionary biology:
basic differences in cost to men and women of reproduction
Survival probabilities of individuals with different traits
Evolutionary psychology:
Harder to justify
Question: how long does it take to overcome institutions arising from out-dated situations? (Seabright, The War of the Sexes, is a good read on this.)
ECON 339: economic behaviour and gender (Eswaran ch 2)
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2. Culture and/or social norms
Huge topic
More credible than evolution (I think)
Problem: can help explain why institutions, once in place, do not change – but origins of these institutions?
Eswaran has a paper on the origin of the caste system in India.
ECON 339: economic behaviour and gender (Eswaran ch 2)
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