Conceptual Operational

Introduction

Gender's influence on pricing decisions and income is a compelling topic for behavioral studies in professional practices because the number of women in professional graduate programs has grown rapidly in the past two decades. The percentage of female law students, for instance, has grown from less than 10% in the 1970s to roughly 49% in 2002, according to the American Bar Association.

Likewise, the percentages of women in medical and veterinary schools were reported by their professional associations to be 45% and 72%, respectively, in 2005 (Conlin, 2003). Although the entry of women into the professions is certainly laudable from a diversity and equity perspective, one often heard concern is the impact of gender mix on the income in these professions. Studies of gender related income levels in the legal, dental, medical, and veterinary professions all find that women earn significantly lower incomes than their male counterparts (Cron, Slocum, Goodnight, & Volk, 2000).

Not only does a salary gap exist, but it seems to widen rather than decline as years of experience increase (Brown & Silverman, 1999). The reasons behind the apparent lower incomes of female professional practice owners are not well understood. For example, a sizable gap in income still exists even after accounting for the fewer hours worked by women veterinarians, their lower earnings expectations, and their choice of a profession for reasons other than income potential (Volk et al., 2005).

This study takes an approach, distinct from other gender studies, by examining both the direct and indirect effects of gender on income and the indirect influence of gender on income through pricing behavior.

The literature and hypotheses

Gender and price setting

There is empirical evidence that gender affects pricing. Gender has been shown to be important in economic decision making contexts, such as investment decisions in behavioral finance (e.g., [Dwyer et al., 2002], [Felton et al., 2003], [Mohan, 2004] and [Schubert et al., 1999]), and negotiations (e.g., [Barron, 2003], [Croson and Buchan, 1999] and [Kray et al., 2002]).

A growing literature suggests that women tend to settle for lower prices and lower profits in behavioral experiments (e.g., [Babcock and Laschever, 2003], [Myers, 1996] and [Neu et al., 1988]). In a study of mortgage lenders, for instance, it was found that gender played a major role in lender compensation.

Woodward (2003) found that female brokers made $575 less per loan than did their male peers making similar loans, leading to lower compensation for women. She posits that the female brokers charged lower fees compared to males because they were more concerned about establishing a good relationship and being “nice” than were men, although this explanation was not empirically tested.

Why do women set lower prices?

If women are found to set lower prices than men for similar services, what is the explanation for this result? In other words, we also want to identify the process by which gender influences pricing behavior.

Hypothesis 1

The relationship between gender and price quote will be mediated by relationship orientation.

Client effects

Based on prior empirical research, we also ...