Resource Allocation and Perceived Advantage are Affected by Relative Power and Egocentrism in Ultimatum Games

Abstract

Results of two experimental studies demonstrate that resource allocation decisions and perceived advantage are affected by relative power and egocentrism. Relative power was operationalized as relative favorability of best alternative to a negotiated agreement (BATNA). In study 1, 63 MBA students were asked to decide how to distribute lottery tickets between themselves and another player using the ultimatum game paradigm. Results indicated their offers were affected by the magnitude of the BATNA such that possession of a favorable BATNA induced participants to keep a larger share of the lottery tickets and possession of an unfavorable BATNA induced participants to keep a much smaller share of the lottery tickets. However, this effect was attenuated by the absolute magnitude of the number of tickets available to distribute. That is, participants with higher absolute magnitude of lottery tickets kept more for themselves compared with participants with lower absolute magnitude of lottery tickets. We argue that this attenuation was due to egocentrism, that is, the tendency to pay more attention to one's own outcomes than others' outcomes. In study 2, we tested this assertion more directly by focusing only on unfavorable BATNA situations. Results indicated that, as occurred in study 1, high absolute magnitude of lottery tickets led participants to claim a relatively larger share of tickets when compared with low absolute magnitude lottery tickets, but only when participants were explicitly focused on themselves. Implications for future conflict resolution research and practice are discussed.