The Effects of Contracts on Interpersonal Trust

This paper uses two laboratory experiments to investigate the effects of contracts on interpersonal trust. We predict that the use of binding contracts to promote or mandate cooperation will lead interacting parties to attribute others' cooperation to the constraints imposed by the contract rather than to the individuals themselves, thus reducing the likelihood of trust developing. We also predict that, although non-binding contracts may not generate as much initial cooperation as binding contracts, they will generate personal rather than situational attributions for any cooperation that results and will therefore not interfere with trust development. Two experiments investigated the effects of the use and…