Gender, Competition, and Managerial Decisions

When given information about a worker’s ability and gender, male managers choose the tournament payment scheme significantly less often for their female workers. When no information about worker ability is given to the manager, there is no difference in compensation choice for the worker.

• When given a choice, 66% of male workers choose the tournament, compared to only 49% of female workers.
• When not given information about a worker’s ability, male and female managers choose compensation schemes at similar rates for all workers.
• When given information about a worker’s ability, male managers use tournament compensation schemes less often for female workers, whereas female managers do not make different assignments based on the gender of the worker. Male managers choose the tournament for 63% of male workers and 27% of female workers. Female managers choose the tournament for 46% of males and 41% of females, which is not statistically different.
• Even after controlling for the manager’s evaluation of his or her worker’s subjective ability, past performance of both the worker and the manager, and the manager’s own preference for the tournament, a manager is 17% less likely to use a tournament for a female worker.

Male managers choose competitive compensation schemes significantly less often for female workers than male workers.  

160 men and 150 women took part in this experiment. Participants were told they had to answer addition problems. In task 1 (piece rate), participants were given a five-minute addition exercise, with 75 cents per correct answer. In task 2 (individual tournament), participants were given a five-minute addition exercise and received $1.50 per correct answer if the participant answered more than his/her opponent. In task 3, participants were paired with the person sitting next to them. Both were asked to take the role of a “manager” and choose a compensation scheme for their partner (the “worker”). Whether participants saw their partner’s Tasks 1 and 2 performance or not was varied. After this, one of the participants in the pair was randomly designated as the manager, and his or her choice is implemented. The worker in the pair was the only one in the pair who participated in the addition exercise in task 3, and the manager was paid $1.00 for every correct answer the worker provided. In task 4, each participant returned to his or her original role, and chose between piece rate or the tournament.