Linda Babcock

Bio: Linda Babcock is an academic researcher from Carnegie Mellon University. The author has contributed to research in topics: Negotiation & Settlement (litigation). The author has an hindex of 28, co-authored 74 publications receiving 7343 citations.

Labor Supply of New York City Cabdrivers: One Day at a Time

Abstract: Life-cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages because such changes have virtually no effect on life-cycle wealth. Previous attempts to test this hypothesis empirically with time-series data have not been supportive; estimated elasticities are typically negative or nonsignificant. Such analyses, however, are vulnerable to measurement error and other estimation problems. We use data on daily observations of wages and hours for New York City cab drivers to estimate the supply response to transitory fluctuations in wages. Cab drivers decide daily how many hours to supply, and face wages that are positively correlated within days, but largely uncorrelated between days. Using these data, our central finding is that wage elasticities are persistently negative–from -.5 to -1 in three different samples–even after correcting for measurement error using instrumental variables. These negative wage elasticities challenge the notion that cab drivers trade off labor and leisure at different points in time and question the empirical adequacy of life-cycle formulations of labor supply.

Explaining Bargaining Impasse: The Role of Self-Serving Biases

Abstract: The authors review studies conducted by themselves and coauthors that document a 'self-serving' bias in judgments of fairness and demonstrate that the bias is an important cause of impasse in negotiations. They discuss experimental evidence showing that (1) the bias causes impasse; (2) it is possible to reduce impasses by debiasing bargainers; and (3) the bias results from selective evaluation of information. The authors also review results from a field study of negotiations between teachers' unions and school boards in Pennsylvania that both document the fairness bias in a naturalistic setting and demonstrates its impact on strikes.

Women Don't Ask : Negotiation and the Gender Divide

Abstract: PREFACE: WhyNegotiation, and Why Now? ix INTRODUCTION: Women Don't Ask 1 CHAPTER ONE: Opportunity Doesn't Always Knock 17 CHAPTER TWO: A Price Higher than Rubies 41 CHAPTER THREE: Nice Girls Don't Ask 62 CHAPTER FOUR: Scaring the Boys 85 CHAPTER FIVE: Fear of Asking 112 CHAPTER SIX: Low Goals and Safe Targets 130 CHAPTER SEVEN: Just So Much and No More 148 CHAPTER EIGHT: The Female Advantage 164 EPILOGUE: Negotiating at Home 180 ACKNOWLEDGMENTS 187 NOTES 189 REFERENCES 201 INDEX 217

Biased Judgments of Fairness in Bargaining

Abstract: When court trials (or arbitration) are the mechanisms for resolving bargaining impasses, the costs and risks associated with third-party intervention should motivate settlement (Henry Farber and Harry Katz, 1979) However, empirical evidence suggests that impasses and inefficient settlements are common in the legal system and in contract negotiations For example, one study of asbestos suits found that only 37 cents of every dollar spent by both sides end up in the plaintiffs' hands (James Kakalik et al, 1983)

A theory of fairness, competition and cooperation

Abstract: There is strong evidence that people exploit their bargaining power in competitivemarkets butnot inbilateral bargainingsituations. Thereisalsostrong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selesh types dominate equilibrium behavior.

A Theory of Fairness, Competition and Cooperation

Abstract: There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if a fraction of the people exhibits inequality aversion the puzzles can be resolved.

Gender Differences in Preferences

Abstract: This paper reviews the literature on gender differences in economic experiments. In the three main sections, we identify robust differences in risk preferences, social (other-regarding) preferences, and competitive preferences. We also speculate on the source of these differences, as well as on their implications. Our hope is that this article will serve as a resource for those seeking to understand gender differences and to use as a starting point to illuminate the debate on gender-specific outcomes in the labor and goods markets.

False-Positive Psychology: Undisclosed Flexibility in Data Collection and Analysis Allows Presenting Anything as Significant

Abstract: In this article, we accomplish two things. First, we show that despite empirical psychologists' nominal endorsement of a low rate of false-positive findings (≤ .05), flexibility in data collection, analysis, and reporting dramatically increases actual false-positive rates. In many cases, a researcher is more likely to falsely find evidence that an effect exists than to correctly find evidence that it does not. We present computer simulations and a pair of actual experiments that demonstrate how unacceptably easy it is to accumulate (and report) statistically significant evidence for a false hypothesis. Second, we suggest a simple, low-cost, and straightforwardly effective disclosure-based solution to this problem. The solution involves six concrete requirements for authors and four guidelines for reviewers, all of which impose a minimal burden on the publication process.