Distrust in Negotiation

New Insights from NTR Grant recipient Simone Moran, Ben Gurion University

Honesty is an important concern in negotiations. In this research, we focus on two related dilemmas that negotiators face: whether to be honest and whether to believe their counterparts. We propose a theory that describes how they approach these dilemmas and show the consequences. We argue that when deciding whether to be honest, negotiators are motivated not only by greed but also by moral-image concerns and anticipated guilt, which in turn reduces their dishonesty. However, when deciding whether to believe other negotiators, people assume the other is primarily motivated by greed, not by moral concerns, which leads them to overestimate other negotiators’ dishonesty.  In a series of studies, we provide evidence for this theory. Across our studies, participants were assigned to either a Behavior condition, playing the role of sellers of a faulty device, and incentivized for the deal they closed, or to an Expectation condition, incentivized to accurately predict sellers’ disclosure of the malfunction. Consistent with our theorizing, we find that people grossly overestimate how much negotiators deceive and that this results from overestimating the extent to which other negotiators are motivated by greed and underestimating the extent to which they are driven by moral concerns. This discrepancy between actual and expected negotiator motives is important because it could impede initial trust in negotiation, and consequently lead to inefficient agreements.