Organizations and individuals solve problems of trust by signing contracts. Well-written contracts make clear what one party should expect from another. But, according to a new study, contracts can also change perceptions of why people behave as they do.
The study, published in Administrative Science Quarterly (Fall 2002), contradicts the notion that binding contracts are the foundation for mutual trust. Indeed, the study found that “the use of binding contracts seems to have kept interacting...
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