Trustworthiness gap in negotiations

Many negotiations result in suboptimal agreements in the sense that they could be greatly improved for both sides. This is largely because of lack of trust and cooperation. We propose a theory that explains why this happens. The theory assumes that negotiators have the wrong idea of what motivates their counterpart. They expect them to be only motivated by self gain, and therefore they expect them to cheat when it is in their economic self-interest. But people cheat less because they are motivated to feel like an honest person, and wish to avoid feeling guilty if not. Consequently, negotiators overestimate how much their counterpart would cheat. This leads them to distrusting their counterpart, which in turn causes a self-fulfilling distrust-dishonesty cycle, resulting in reduced cooperation and suboptimal agreements. The proposal aims to demonstrate this gap, explain it, suggest ways to decrease it, and examine its effect on real negotiation behavior. Theoretically, we contribute to the negotiation and trust literatures by providing a new theory of expectation gap, and by challenging the common notion that negotiators are essentially dishonest. Our proposal also has important practical implications for enhancing trustworthy behavior and reaching more efficient negotiation outcomes.