Solving The Trust Problem | Professor Freeman

“How do I know it’s safe to deal with you,

and that your assurances are reliable?”

 

mediaWhat if there was a single papperater question, the answers to which could bring most fields of study together and shed uniquely important light on how peace emerges, civilizations rise, economies operate, governments function, and businesses thrive? What if that same question was more central to understanding our shared lives together than the core questions most specific academic fields ask, and so deserved to be placed nearer the center of intellectual and professional life?

I believe there is such a question. It’s a question I have gas grill covers researched for two decades: “how do I know it’s safe to deal with you, and that your assurances are reliable?” That’s the Trust Problem, and it stands at the very heart of negotiation, the social sciences, the humanities, the sciences, and far more. Here, I briefly note 12 Key Principles I’ve drawn my from research:

 

12 Key Principles:

 

  1. The Trust Problem is Key, Not ‘Trust’. God forbid trust is essential to collaboration, or peace treaties and commerce with strangers would be impossible. Conversely, telling poor honest people to be more trustworthy won’t help them, and telling victims of corruption to trust more won’t either.

  1. The Trust Problem is Central to Negotiation & Conflict Management. That’s because we fear the other will try to gain a lot at our expense, he fears the same thing. Much of our work focuses on wisely dealing with that fear.

 

  1. Many Fields Focus on the Trust Problem by Different Names. For example, Social Sciences call it ‘social dilemmas.’ Law calls it ‘performance issues and breach of contract.’ Military and foreign affairs call it ‘security risk.’ Finance calls it ‘credit risk.’ Literature calls it ‘betrayal.’ Business calls it ‘performance risk.’ Natural sciences is a set of methods for solving it when someone makes an assertion about how nature works.

 

  1. Our Greatest Success and Failures Hinge on the Trust Problem. Most primitive people lived violent lives in fear of other men. Modern life is filled with distant and complex collaboration. But the headlines testify to serious Trust Problems- war, corruption, bankruptcy, default, crime, and so on.

 

  1. No Monopoly on Wisdom: There is a Universe of Solutions to the Trust Problem. Economists tout incentives. Game theorists tout strategies like Tit for Tat. Lawyers favor contracts. Regulators recommend government intervention. Children use playground gambits (‘I cut you choose.’) Sociologists emphasize norms and networks. Let a hundred flowers bloom.

 

  1. There are Soft and Firm Solutions to the Trust Problem. Soft sources are ways you began to learn as a child- friendship, rapport, kindness, social norms, groups, and the like. Firm solutions include Trust Mechanisms (see below.) Creative negotiation and other negotiation methods include both.

 

  1. Most Negotiation Principles Partially Solve the Trust Problem. For example, being ‘hard on the problem, soft on the person,’ helps you do well in trustworthy ways that are good for the other person too.

 

  1. Trust Mechanisms are One Key Treatment Option. These are arrangements and devices you can rely on when you can’t fully rely on the other’s promise alone. Examples: collateral, credit cards, clear boundaries, power sharing, sponsors and guarantors, incentives & penalties, formal meeting rules, and fair standards. You can ask for some or offer some. Most peace treaties and high level deals have several of them.

 

  1. The Best Trust Mechanisms are Solutions Hiding in Plain Sight (SHIPS). SHIPS have the curious and precious ability to help you both connect and protect; they are Trust Mechanisms that help you safely collaborate and feel closer and more trusting of the other. Simple discussion rules, reputation reporting arrangements, and the simple rules governing Open Source software projects are all examples.

 

  1. A Business is a Set of Valuable Promises- and so Trust Problems- Well Managed. Where there are promises there are Trust Problems, and almost everything on a business’s balance sheet is a promise, including cash (a bank’s promise), A/R (a customer’s promise), A/P (a promise to a supplier or lender) and so on.

 

  1. Humble Inquiry Into the Trust Problem Has Led to the Nobel Prize. Elinor Ostrom crossed several academic lines to study how villagers manage fish in a lake, grazing land, and other valuable things without cheating each other. Her work revealed rich examples of customized norms and creative Trust Mechanisms at work—and for it she won the Nobel Prize in economics.

 

  1. The Trust Problem Deserves its Own Field of Study: Epistonomics. We lose none of other subjects’ value, and gain much, if we integrate their wisdom into a shared search for understanding this most central of questions.

For more information about my work on the Trust Problem, contact Prof. Freeman  

I also explore the Trust Problem in lectures 7 and 23 my Great Courses ™ video The Art of Negotiating the Best Deal.