Self-interest and fairness in coalition formation: A social utility approach to understanding partner selection and payoff allocations in groups

In this chapter we present a social utility approach to coalition formation. The central tenet of our approach is that outcome allocations and partner selection in multiparty situations are affected by self-interest and fairness. Inspired by the social utility model we argue that the relative weight assigned to both components is affected by structural aspects of the situation and individual characteristics of the negotiators. We first investigate how coalition bargainers substantiate their coalition demands. We show that bargainers are self-serving in their choice of allocation rules, indicating that perceptions of fairness can be coloured by self-interest. Second, we investigate how the alignment of self-interest and fairness fosters the formation of coalitions that maximise the payoffs of its members. Finally, we present a series of experiments that expands the notion of being fair to those who are excluded from a coalition. We show that bargainers are reluctant to benefit themselves when this harms the outcomes of others and that this is dependent on personal factors (e.g., social value orientations), situational factors (e.g., the valence of outcomes), and whether bargainers negotiate in an interindividual or in an intergroup setting.     

Honesty pays: On the benefits of having and disclosing information in coalition bargaining

People typically think of negotiations as competitive, which often leads them to engage in secrecy and even deception. In three experiments we show that this approach can backfire in coalition bargaining. Results show that, even though bargainers with an outcome advantage only obtain favorable outcomes when this information is public, they rarely choose to reveal this information. Fairness motivations fueled decisions to reveal this information and make attractive offers whereas self-interest fueled decisions not to reveal and make unattractive offers. Finally, perspective taking increased proselfs' inclinations to keep their advantage private whereas it increased prosocials' inclinations to reveal. These findings suggest that many people are not naturally inclined to reveal private information when they have an outcome advantage, but that fairness motives encourage revelation and, ironically, increase revealers' outcomes in coalition bargaining. Thus, in this context, honesty pays.     

Strength-is-Weakness: The (ir)relevant relation between resources and payoffs in coalition formation

A key observation in coalition formation is that bargainers who control many resources are often excluded from coalitions by bargainers who control few resources, the Strength-is-Weakness effect. We argue that this effect is contingent on whether resources provide a legitimate claim to be included in a coalition. Across three incentivized coalition experiments (n = 2745; 915 triads), three participants (player A had four resources, player B had three resources, player C had two resources) negotiated about a payoff of 90 monetary units. Depending on condition, these resources were obtained randomly, earned, or earned and proportionally linked to the payoff. Results showed player As were less included when resources were obtained randomly and more often included in coalitions when resources were earned and/or proportionally linked to the payoff. This provides evidence that the Strength-is-Weakness is contingent on the legitimacy of the resources.