CONDITIONS AND OUTCOMES OF TRUST IN A TWO-PERSON BARGAINING EXERCISE Developments In Business Simulation & Experiential Exercises, Volume 17, 1990 179 CONDITIONS AND OUTCOMES OF TRUST IN A TWO-PERSON BARGAINING EXERCISE John K. Butler, Jr., Clemson University ABSTRACT Relationships among conditions and outcomes related to trust were investigated in the context of a two-person bargaining role-play. A model of trust was used to generate seven hypotheses about the relationships among expectations, trust, information sharing, influence, and control. An additional 12 hypotheses were tested concerning the effects of established trust and information sharing on six bargaining outcomes. Participants were 232 graduate and undergraduate students in nine organizational behavior classes, which met from 1987 to 1989. INTRODUCTION This study tested a number of hypotheses derived from a model relating expectations, trust, information, influence, and control in two-person situations. Favorable expectations about another’s trustworthiness increase one's initial trust in the other. This initial trust predisposes the sharing of information, the acceptance of influence, and the relaxation of controls. These responses feed back to Increase and further establish trust, which is necessary for a stable relationship. The enhanced trust will lead to mutual sharing of benefits for both parties. Finally, it was hypothesized that information sharing and established trust would lead to a number of favorable outcomes. METHOD The Ugh Orange Exercise was role-played by 232 graduate and undergraduate management students, 116 dyads. Trust was manipulated experimentally. Bargaining pairs were assigned randomly to low or high trust conditions. The low-trust condition was created with instructions that warned of industrial espionage, law suits against each other’s firms, and a low level of trust between the two bargainers. High- trust instructions described interfirm information sharing, cooperation, and high levels of interpersonal trust. After reading about their roles and the trust conditions, the bargainers completed a questionnaire with scales measuring perceptions of the other bargainer’s control expressed, perceptions of the other’s control wanted, and interpersonal trust in the other. Control wanted and expressed were modified from FIRO-B (Schutz, 1958) in order to pertain to perceptions of the other’s characteristics, rather than one’s own. Also, the items were worded to pertain specifically to the other bargainer. For example, ‘1 let other people decide what to do’ (Schutz, 1958, p. 63) was changed to, “Dr. Jones lets other people decide what to do.” Interpersonal trust was measured with an interpersonal trust inventory developed by the author. Each bargaining dyad was monitored by an observer. The researcher briefed the observers about the win-win possibility, but not about the manipulation of trust. Observers were not allowed to read the role descriptions. Each observer reported: (a) the time it took the bargainers to realize that there bias a win-win solution, (b) whether the bargainers seemed to trust each other, (c) how much information was shared, (d) how much money each firm would pay, (e) to whom and how the oranges were to be delivered, and (f) how many oranges each firm would get. The hypotheses were tested with ordinary least squares regression analyses. A structural equation was written for each of the relationships indicated. RESULTS Expected trust in the other was a highly significant cause of one’s initial perception of trust (b-.88, 2< .0001). Initial perception of trust was significantly related to one’s initial perception that the other would relax controls (b=.61, p<.0001) and to one’s initial perception that the other would accept influence (b=.30, E<.0001). The role players’ perceptions that the other would relax controls (averaged over the two individuals) led to established trust, as reported by the observers (b = .39, p<.0001). Information sharing was significantly related to the following outcomes: (a) established trust (b.45, 2< .001), (b) dissimilarity of agreed quantity of merchandise to be obtained (b= .24, p<.05), (c) time to realize the win-win nature of the problem (b=41, 2<.O01), and (d) agreed total quantity of merchandise to be obtained (b=.37, £<.O1). Established trust was significantly related to the following outcomes: (a) Dissimilarity of agreed delivery plans (b=.38, p<.01), and (b) Agreed total payment for merchandise to be obtained (b=.21, E<.05). DISCUSSION In general, the model of the dynamics of trust was supported. One role player's expectation of trust in the other role player was a highly significant cause of one’s initial perception of trust in the other, which in turn was significantly related to one’s initial perceptions that the other would relax controls and accept influence. However, the link between initial trust and information sharing was only weakly supported and the link between perception of acceptance of influence and established trust bias not supported at all. Apparently, the initial level of trust had only a weak effect on the future sharing of information. In contrast, the perception of relaxed controls had a very strong effect on future established trust. If this finding can be generalized, its practical implication is that one’s trust in another depends on the belief that the other will not attempt to control one’s behavior. This 1ink between trust and control was specified, from the opposite perspective, in a popular definition of trust: "willingness to increase one’s vulnerability to another whose behavior is not under one’s control...’. Thus, if one can control another’s behavior, one’s trust in the other is not necessary; but if the other controls ones behavior, one’s trust in the other is not likely. Table of Contents Volume 17, 1990 The Impact of Decision Support Systems on the Effectiveness of Small Group Decisions - Revisited The Relationship Between Financial Performance and Other Measures of Learning on a Simulation Exercise Use and Effectiveness of an Analogy-Based Expert System Suggestions for Computerized Business Authors Dealing with Power: An Experiential Exercise Using Movie and Personal Diary Analysis Techniques A Model for Developing Student Skills and Assessing Outcomes Through Outdoor Training Computer-Aided Exercises Versus Workbook Exercises as Learning Facilitator in the Principles of Marketing Course An Exposition of Guilford's Si Model as a Means of Diagnosing and Generating Pedagogical Strategies in Collegiate Business Education Formal Planning and Simulation Team Performance: A Cross Sectional Approach Cases: Real Organizations in Real Time in the Classroom An Empirical Investigation of the Internal Validity of Marketing Simulation Game An Empirical Evaluation of the Pedagogical Value of Playing a Simulation Game in a Principles of Marketing Course Factors Affecting Effective Teaching of Strategic Planning: Some Preliminary Evidence An Experiential Exercise for Learning About the Relationship Between Organizational Form & the Project Management Process Accounting Communication Skills can be Taught in the Auditing Course Modeling Cost Functions in Computerized Business Simulation: An Application of Duality Theory and Sheppard's Lemma A Life Cycle Analysis of Decision Making for a Strategic Management Team What's the Problem? A Dynamic Model for Teaching Problem Solving Skills Experientially International Currency Fluctuations: Money$im, A Simulation Superstores: A Specialized Retailing Simulation Within a Specialized Marketing Curriculum Factors Affecting Student Perceptions of Learning in a Business Policy Game VC + EL = VL The Name Game: An Experiential Exercise in Intergroup Relations The Effects of Experiential Accounting Work Experience on Student Performance in Intermediate Accounting Courses The Results of Using the Experiential Activity Group Performance Evaluation in a Business Policy Setting Using a Legal Database to Describe the Legal Environment of Marketing (and Business) Matching Environmental Uncertainty and Organizational Configuration An Instructional Computer Simulation of Tampering in QC Executive Evaluation of Student Learning in the Looking Glass Simulation Group Personality Composition and Total Enterprise Simulation Performance An Expert System for Selecting Analytical Techniques for Analyzing Marketing Research Data Effects of Cognitive Styles on Responses in an In-Basket Simulation A Psychometric Analysis of Kolb's Revised Learning Style-Inventory Selecting and Developing Experiential Exercises Using Movies Application of a Real-World Strategic Management Model in the Classroom Demand Equations which Include Product Attributes Consumption as the Objective in Computer-Scored Total Enterprise Simulations The Effects of Decision Format and Evaluation on Simulation Performance, Decision Time, and Team Cohesion The Effects of Computer Related Assignments on Student Performance in Business Administration The Money Game: A Dynamic Simulation Including Random Shocks for Money and Banking Courses Methods for Evaluating Performance on Business Simulations: A Survey The Effects of Synergogy on the Policy Course: Significant Improvements in Student Learning and Teacher Evaluation Conditions and Outcomes of Trust in a Two-Person Bargaining Exercise Bankgame Enhancing Computer Business Simulation with the Use of VGA Graphics An Experiential Approach to Entrepreneurship An Advanced Simulation Method (ASM) for Multiple Objective Problems The Influence of Experiential learning Techniques on Student Recognition of Non-Primary Learning Styles Negotiating Mergers and Acquisitions: A Cocktail Napkin Approach Identification of Unintended Effects in Experiential Laboratory Exercises An Experimental Comparison of Paper and Pencil and Computer Aided Decision Support Tools Porting a Simulation from the IBM World to the Macintosh World A Transaction Cost Analysis of Experiential Learning The Development of Experiential Exercises for Courses in Entrepreneurship and Small Business Management The Assessment Center as and Experiential Classroom Exercise Pricing Strategy Algorithms for Playing Business Simulations Organizational Structures for International Operations: An Experiential Activity Simulation Emphasis in the Business School Capstone Course An Integrated Approach to Computerizing the Business Curriculum Cross-Cultural Business Negotiations Exercise Organizational Socialization and Gender Differences in Students at Work Understanding Student Work Experience: A Content-Analytic Approach Introducing Executive MBA Programs with Management Games An Analysis of Improvement in Business Decision Outcome with Sequential Use of Two Simulation Games Teaching Business Policy Utilizing Mass Lecture and Individual Case Labs Potholes Along the Road to Evaluating Learning Outcomes: The Case of Outdoor Management Training Experiential Learning for Interior Design Students: Using CADD, Lotus 1-2-3, and Wordperfect Cognitive Learning Using a Computer-Based, Qualitative Interactive Business Simulation Sex Discrimination: Does the Woman get the Job or Does the Best Man Win? A Search for Visual Aids to Support Experiential Learning Through the 1990's An Experimental Analysis fo the Effectiveness of Student Role-Playing in Sales Training How to Have Students Learn from their Term Projects Self-Evaluation Exercise (SEE): An Assessment of Class Contribution A Study of the Influence of Team Formation on Attitudes and Performance in Management Games A Hardware Based CIM Simulation Laboratory Model Test Substance Abuse in Organizations Micro Computer Training Models Teaching Forecasting, Cash Budgeting and Inventory Model Building Using SBTools A Comparison of the Effects of Experiential Learning Activities and Traditional Lecture Classes An Adjunct Writing Instruction Assistant, The Computer; With an Illustration Classroom Software for ABC Analysis Utilizing Information Processing Technology to Enhance the Business Policy Simulation Experience Progressive Cases Realistic Job Previews Vs. Traditional Job Previews: Experiencing the Differences and Understanding the Consequences Investment Analysis Using the Pragmatic Multiplier Approach A Computer Simulation Interface for Competitive and Firm Analysis Self-Assessment of Ethical Decision Making Predispositions Preparing Managers for Overseas Assignments An Inquiry into Japanese Marketing: Workshop on Teaching Japanese Marketing The Performance Appraisal Feedback Interview: A Role Play for Human Resources Management Teaching Counselor Selling techniques Using Experiential Techniques to Teach International Topics International Management Simulation Gaming: Current Status and Future Developments A Realism Comparison of Simulation Technologies/Methodologies A Time-Efficient Game to Illustrate Concepts Taught in Management Courses and Management Development Programs Teaching the Management of Technology The Concept of Face and the Applicability of Experiential Exercises in an Oriental Culture's