Proceedings of the Annual Meeting of the Cognitive Science Society

Women and minorities obtain lower salaries when negotiating their employment compensation. Some have suggested that automated negotiation and dispute-resolution technology might address such material inequities. These algorithms elicit the multi-criteria preferences of each side of a dispute and arrive at solutions that are efficient and "provably" fair. In a study that explores the potential benefit of these methods, we highlight cognitive factors that may allow inequities to persist despite these methods. Specifically, risk-averse individuals express lower preferences for salary and as risk-aversion is more common in women and minorities, this translates into a ``provably'' fair lower salary. While this may reflect actual underlying differences in preferences across groups, individuals may be confounding their preferences for salary with their risk preference (i.e., their fear of not reaching an agreement), such that these groups achieve worse outcomes than they should. We further highlight that methodological choices in how negotiation processes are often studied can obscure the magnitude of this effect.