Women Earn More by Charging Less: Evidence from Airbnb

Abstract: Research has found that women earn less because they set lower prices for their labor and products. We show that the opposite can occur, where women set lower prices for their products, which in turn attracted more customers and yielded higher revenue. Using data from 156,519 Airbnb transactions, and data from six additional pre-registered studies (two incentive-compatible simulations, and a causal experiment chain, total N = 1257), we found that women’s stronger relational orientation, a tendency to value connection and accommodate others’ needs, led them to set lower prices, which in turn increased bookings and earnings compared with men. There was also some evidence that women’s tendency to set lower prices was strategic in nature. Women (but not men) set lower prices in elastic, but not inelastic, markets, obtaining more bookings and earning more revenue. Taken together, these findings indicate that women’s relational tendency, often construed as an economic liability, can thus become a financial advantage in some circumstances. These results also complicate longstanding assumptions about gendered economic outcomes.

Keywords: gender, pricing, relational orientation, price elasticity of demand