Offers beyond the negotiating dyad: Including the excluded in a network exchange experiment

Abstract

Based on the assumption of self-interest, allocations in network exchange models and experiments are typically restricted to negotiating dyads. Network members beyond the dyad are excluded by design from a share of the divided resource. Social value orientation may, however, induce subjects to allocate parts of the resource to third network members. We experimentally study three-person networks in which subjects can make bilateral offers that allocate payoff shares to all network members. Our results show that subjects give on average ten percent of the bargaining value to third network members if they have this option. The concern for third network members is moderated by social values: the stronger the social value orientations of the deciding individuals, the more payoff is allocated to third network members. We conclude that fairness is an important initial motivator that affects the way in which structural power is used in network exchange.