ORGANIZATIONAL

BEHAVIOR

AND HUMAN

DECISION

PROCESSES 51,

176-197 (1992)

Egocentric

Interpretations of Fairness and Interpersonal Conflict
LEIGH THOMPSON University of Washington AND GEORGE LOEWENSTEIN Carnegie-Mellon University

Two experiments tested the hypothesis that egocentric interpretations of fairness are an important cause of unnecessary and costly settlement delays in bargaining. Subjects engaged in an interactive, dynamic bargaining task in which their objective was to reach an agreement with an opponent. If negotiators failed to settle, a strike ensued which was costly for both parties. The results of Experiment 1 indicated that negotiators’ judgments of fair outcomes were biased in an egocentric direction. Further, the magnitude of the parties’ biases strongly predicted the length of strikes. Experiment 2 examined the role of situational complexity as a cause of egocentric interpretations of fairness. Two forms of complexity were examined: complexity created by background information concerning the dispute and complexity associated with asymmetries in negotiators’ strike costs. Background information concerning the dispute and asymmetric costs exacerbated egocentric interpretations of fairness. Egocentric interpretations of fairness were greatest when measured before negotiation and were mitigated following bargaining. Negotiators showed biased recall of information concerning the dispute, remembering more information that favored their own position. The magnitude of bias was positively related to egocentric interpretations of fairness. We conclude that egocentric interpretations of fairness hinder conflict resolution because people are reluctant to agree to what they perceive to be an inequitable settlement. 0 1992
Academic Press. Inc.

A major enigma for negotiation researchers is why people often fail to reach agreements in situations where settlement is mutually advantageous. The failure to settle is particularly perplexing and unfortunate in disputes in which both parties suffer substantial losses if they do not reach The research reported in this article was supported by a grant to the first author from the Graduate School Research Fund at the University of Washington and a grant to the second author from the Russell Sage Foundation and Alfred P. Sloan foundation. We thank Linda Palmer, Amy McCready, and Alison Marqis for assistance in data collection, preparation, and analysis. Address correspondence and reprint requests to Leigh Thompson, Department of Psychology, University of Washington, Guthrie Hall, NI-25, Seattle, WA 98195. 176 0749-5978192 $3.00
Copyr&ht 8 1992 by Academic Press, Inc. AI1 rights of reproduction in any form reserved.

EGOCENTRIC

INTERPRETATIONS

OF FAIRNESS

177

agreement. For example, in labor disputes, impasses can result in costly strikes; in civil suits parties who fail to settle face legal expenses and court costs; territorial disputes that are not peaceably resolved may degenerate into armed conflict. Impasses are surprising in these situations because there is a potentially large “zone of agreement” and generally ample opportunities exist for communication between parties. So what explains the occurrence of unnecessary impasse? Our thesis is that one important cause of unnecessary impasse is that people have different interpretations of conflict situations (Hammond, Stewart, Brehmer, & Steinmann, 1975). Because conflict situations are typically complex, ambiguity often arises concerning parties’ contributions and entitlements. Ambiguity, in turn, permits multiple interpretations of “fair” or equitable settlements. We hypothesize that when faced with ambiguity, people’s judgments will be biased in a manner that favors themselves. Such “egocentric interpretations” of fairness (Messick & Sentis, 1985) interfere with dispute resolution because people are averse to settling for what they consider to be an unfair agreement (Loewenstein,