Making and breaking coalitions: Strategic sophistication and prosociality in majority decisions

Abstract

From a traditional rational choice perspective, coalitions are inherently unstable if collective decisions involve distributional conflicts. Empirically, however, many coalitions and distribution decisions seem rather stable. While traditional explanations for the empirical stability of coalitions refer to institutions, more recent theoretical developments argue that behavioral traits like actors’ strategic sophistication and prosociality have stabilizing effects. In this study, we provide a first empirical test of this theoretical claim. In a laboratory experiment, we measure subjects’ strategic abilities and their revealed social preferences. Then subjects are matched into three-person groups and play a real-time coalition formation game. Our data show that strategic subjects form more stable coalitions than myopic subjects. Prosocial subjects are more likely to agree on even allocations, and those allocations are more likely to last. Our results indicate that kind and strategically sophisticated people do not need institutions to reach stable coalitions that distribute resources evenly.