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pctrogae - 13 Price Competition: The Role of Gender and...

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13 Price Competition: The Role of Gender and Education Martin Dufwenberg, Uri Gneezy and Aldo Rustichini Introduction ‘Tell me and I forget, teach me and I remember, involve me and I learn.’ These famous words of Benjamin Franklin seem to aptly capture the spirit in which Werner Güth, our hero of the occasion here, interacts with others. 1 Consider, for example, his own explanation of how he brings the implied perspective to the classroom: I teach experimental economics completely differently compared to other things, I teach it in an ‘apprentice’ fashion. I use learning-by-doing in small groups from the start. This is a very nice aspect of experimental economics actually. 2 But Werner involves other people outside the classroom too. Browsing through his publication list, we find more co-authors than we are able to count. We know for a fact that interacting with Werner is a learning experi- ence, and a lot of fun, not least from 1995–7 when we were on the CentER faculty at Tilburg University, which Werner often visited. The research we report on in this chapter derives from projects we started in the Tilburg days, concerning price competition on the one hand and gender effects on the other. Our research objectives are to examine the impact on price competition of, respectively, gender and education. We shall discuss these two issues in turn. Gender and competition Gender gaps are observed in a variety of economic and social environ- ments. Recent research has pointed out various differences between men We are grateful to a referee who provided valuable comments. The research was supported by the NSF grant No. 0318378 and GIF (Gneezy) and NSF/SES-0136556 (Rustichini). 286
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Martin Dufwenberg, Uri Gneezy, Aldo Rustichini 287 and women that may be important in economic interaction. We shall focus on a specific one: 3 when competition is introduced into an environment in which there is no gender gap in performance, the different reaction to competition by men and women might create a gap (Gneezy et al ., 2003; Gneezy and Rustichini, 2003). In particular, when men and women com- pete in the same group of players, men exhibit more competitiveness than women. These results have been derived from contexts where winning is associated with a high payoff: for example, the experiment described in Gneezy et al . (2003) used a winner-take-all design in which the participant with the highest performance is the only one paid, and the amount won equals the total payment to subjects in the non-competitive treatment. This evidence agrees with the general idea found in evolutionary psych- ology, that gender gaps derive from the different position of the genders in the reproductive process: since males can mate successfully with many different women, at small cost, they face large reproductive gains from com- peting intensely with other males. Females, on the other hand, can mate successfully only once per period, and thanks to the competition of males they are likely to find at least one mate. Hence their attention is not devoted
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This note was uploaded on 12/25/2011 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

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pctrogae - 13 Price Competition: The Role of Gender and...

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