Perspective-taking predicts success in coalition formation

Abstract

Predominant economic theories of coalition formation assume that the best strategy during coalition negotiations is to approach as few partners as possible with self-serving offers that barely beat all other competitors while maximizing one's profit. Accordingly, to be included in a winning coalition, one needs to be able to predict others’ intentions, which is called perspective-taking. However, economists derived the idea that these strategies lead to success from observed coalition outcomes, rather than testing the role of perspective-taking empirically or modeling coalition negotiation dynamics. The present research revisits these theories from a psychological perspective within a novel coalition formation game that mimics common problems in horizontal supply chain collaboration. In line with theories of coalition formation, perspective-taking during the negotiation predicted higher inclusion in winning coalitions and higher monetary payoffs, but unexpectedly also longer negotiations. Contrary to predominant theories, perspective-taking led individuals to approach more partners and make other-serving offers, suggesting that successful coalition negotiations rely on different mechanisms than previously thought. These results are also practically relevant because companies often fail to orchestrate their transport flows, which leads to economic losses and environmental damage. These insights are valuable as they call for a psychological revision of predominant theories on coalition formation and shed light on how social behaviour influences horizontal collaboration in the transport sector. Furthermore, these findings underscore the potential of coalition-driven approaches in mitigating environmental consequences, offering a pathway toward sustainable practices in the face of climate challenges.