The impact of negotiated exchange on trust and trustworthiness

Negotiated exchanges and trust problems can be regarded as two different forms of exchange, the former representing exchanges with negotiation and binding contracts, the latter representing asymmetric transactions in which one actor has the opportunity to deceive the other. Both forms of exchange have been extensively studied, but the two respective research traditions exhibit very little overlap. In this paper, we investigate the effects of negotiated exchanges in different network structures on the development of mutual trust. We derive hypotheses from various theories and test them by means of an experiment in which subjects first undertake a series of negotiated exchanges under different power conditions, and then face a trust problem with one of the actors that have been involved in the previous exchanges. The trust problem is operationalized by means of the Investment Game which allows us to look separately at trust and trustworthiness. Our results demonstrate that negotiated exchanges increase mutual trust, but not trustworthiness. (C) 2007 Elsevier B.V. All rights reserved.