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

Abstract

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.In many negotiations, bargainers have private information: what one party knows, the others don't, and the distribution of information can seriously affect both the bargaining process and its outcomes (De Dreu, Beersma, Steinel, & Van Kleef, 2007). Information about who gets what when a specific deal is closed may be common knowledge, but often is only known to the specific individuals who benefit. Typical car buyers, for instance, are aware of their own outcomes and whether they have paid more or less than they wanted. Almost never, however, do they discover the sellers' or the car manufacturers' profits from their transaction. In the current research we investigate the effects of having and revealing private information about the payoffs in multiparty negotiations. We show that the popular belief that people should guard their private information and use it to maximize their own outcomes can backfire in this context. Thus, unlike the general stereotype that depicts negotiations as competitive, strategic, and stealthy, we identify competitive interactions in which honesty pays. Information and bargainingBargainers who have private information must decide how to use this information. In particular, they must choose whether they will share their private information truthfully. Although revealing private information may help to create positive outcomes because it helps negotiators to discover creative outcomes that maximize their joint benefit, in more competitive interactions or purely distributive negotiations, revealing information risks non-reciprocity and exploitation. These dynamics are embodied in the "information dilemma" (Murnighan, Babcock, Thompson, & Pillutla, 1999): revealing information facilitates the achievement of joint outcomes but simultaneously increases personal vulnerability.Economic theories generally assume that bargainers aim to maximize their individual outcomes and that they will use their private information self-interestedly. Kagel, Kim, and Moser (1996), for example, studied the impact of private information...

Fairness Considerations When I Know More than You Do: Developmental Comparisons

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Feeling and Deceiving: A Review and Theoretical Model of Emotions and Deception in Negotiation

“…However, we also assume that people generally prefer to negotiate honestly, such that they will use deception only when they are unable to realize their desired outcomes through honest communication and action (Koning et al., ). These assumptions find support in recent research showing that people demonstrate some aversion to the use of deception—even when the economic benefits of deception exceed the economic costs of deception (Erat & Gneezy, ; Koning et al., ; Lundquist et al., ; Van Beest, Steinel, & Murnighan, )—and prefer to avoid situations that offer them the opportunity to deceive others (Shalvi, Handgraaf, & De Dreu, ). In this “instrumental perspective” on deception, “bargainers (a) will use deception as a means to reach their goals in bargaining but (b) will refrain from using deception when they have alternative means to reach their goals” (Koning et al., , p. 57).…”

The Emotion Deception Model: A Review of Deception in Negotiation and the Role of Emotion in Deception

“…However, proposers were deceptive only 60 times, and responders were deceptive only 61 times. These and other studies demonstrate that individuals have an aversion to engaging in deception even when there are clear economic benefits and little or no costs to doing so (Erat & Gneezy, ; Lundquist, Ellingsen, Gribbe, & Johannesson, ; Schweitzer, Ordóñez, & Douma, ; Van Beest, Steinel, & Murnighan, ). In fact, in some cases, individuals even opt to avoid situations that offer the opportunity to deceive others (Shalvi, Handgraaf, & De Dreu, ).…”