I actually prefer the answer at door number 3, as proposed by Carl in Jerusalem:
Israel Matzav: 'Palestinians' afraid Netanyahu wants to cut a deal?
Sever Plocker on why the 'Palestinians' refuse to negotiate with Netanyahu.The difficulty to explain the current Palestinian position has reached all the way to the White House. Those who carefully read the full Obama interview with Time Magazine realize that he has lost patience with the Palestinians’ elusive conduct. Officials around Obama have spoken harshly: They charged that the Palestinians humiliated the president and screwed up his policy.I disagree. The reason that the 'Palestinians' are not talking to Netanyahu is that they know he will not offer them 100% of what they seek. And they haven't prepared their 'people' for anything else.
What prompts the Palestinian leadership to adopt such stubborn refusal and shun the initiative of a US Administration that may be the most convenient for them? The Palestinians do not wish to negotiate with Netanyahu because they perceive him as a practical politician seeking practical solutions; this is the kind of mess the current Palestinian leadership wishes to stay away from. It doesn’t even want to get close to it.
Palestinian leaders did not mind talks with former PM Olmert, because they knew he had no mandate to finalize any deal, and certainly not a “final-status agreement” which the talks focused on. They in fact liked the futile talks and arguments. Yet when the possibility of a practical agreement first came up and they had to respond to it, they left the talks and did not return.
In the backdrop to the talks with Olmert and Livni was the Bush Administration, which the entire Arab world loved to hate, and whose involvement could be used to explain the failure. Yet with Obama and Bibi negotiations can take a different path. Both of them are politicians who seek results and who are unwilling to waste time on verbal and ideological quarrels.
OK, another option - they are afraid to expose how much they are cooperating with Israel and the US while their population is steaming with desires to reignite the middle east with more bloodshed. While talking, they create the illusion of being friendly with Israel, while not - they try to pretend to be Hamas.
Door #4: If they do reach any agreement, and have any further election/control over area - they are afraid Hamas would swiftly take over and once again throw their asses off the next tallest buildings as they do in Gaza and Teheran.
It all boils down to them shitting their panties with fear from Hamas, while doing their best to keep some status quo which keeps them alive.