We show experimentally that a principal’s distrust in the voluntary performance of an agenthas a negative impact on the agent’s motivation to perform well. Before the agent chooseshis performance, the principal in our experiment decides whether he wants to restrict theagents’ choice set by implementing a minimum performance level for the agent. Since bothparties have conflicting interests, restriction is optimal for the principal whenever the latterexpects the agent to behave opportunistically. We find that most principals in our experimentdo not restrict the agent’s choice set but trust that the agent will perform well voluntarily.Principals who trust induce, on average, a higher performance and hence earn higher payoffsthan principals who control. The reason is that most agents lower their performance as aresponse to the signal of distrust created by the principal’s decision to limit their choice set.Our results shed new light on dysfunctional effects of explicit incentives as well as thepuzzling incompleteness of many economic contracts.