Gender Differences in Negotiation: Evidence fro Real Estate Transactions

Proper assessment of the negotiated ‘item’ is essential in determining whether individualssecure different outcomes through negotiations. For example, evidence that negotiations lead tohigher wages for men than women need not imply differences in negotiation ability but mayreflect differences in outside options and in the assessed value of the employee-employer match.Investigating real estate negotiations, we study a market with detailed information on the value ofthe negotiated item. We find evidence that men secure better prices than women do whennegotiating to buy and to sell property. However, this price difference declines substantiallywhen we include better controls for the property’s value; and the difference is essentiallyeliminated when we control for unobserved heterogeneity in a sample of repeated sales.Intriguingly, the price difference is completely absent when we look at the sales prices individualssecure for property inherited from a deceased parent. This finding suggests that genderdifferences from real estate negotiations likely result from insufficient value assessment and fromfailure to properly control for the different property characteristics demanded by men andwomen. Provided appropriate controls, we find no evidence that men and women securedifferent prices when negotiating over real estate.