Speaking to this imbalance in representation, there is a wealth of theory and research indicating that gender and race are key to understanding: (a) who tends to get placed in leadership roles, and (b) what an individual’s experience will be like while in that role or on the path to it. Yet in many of them-including in organizational, political, and educational domains-leadership roles are disproportionately occupied by individuals of certain social categories (e.g., men, white individuals). By introducing ERRO, our work underscores the importance of post-negotiation behavior and identifies when, how, and why relational outcomes influence economic outcomes. Compared to negotiators who build poor relationships, negotiators who build positive relationships with their counterparts attain better economic outcomes in high ERRO contexts because their counterparts invest greater effort following the negotiation. We find that in high ERRO contexts (e.g., many services, such as hiring a tutor) compared to low ERRO contexts (e.g., buying a couch), individuals negotiate more collaboratively, are more likely to privilege relational concerns over favorable deal terms, or may even forgo negotiating altogether. Across four experiments (N = 1601), we identify ERRO as a fundamental dimension of negotiation contexts. Importantly, although ERRO is an objective feature of the negotiation context for each negotiator, individuals may perceive their negotiation context to have higher or lower ERRO than it actually does. For example, in hiring a tutor, a student may derive economic value from both the wage and the quality of the tutor’s post-agreement service if the student’s post-negotiation relationship with the tutor influences the quality of the service, this negotiation context is high ERRO. ERRO reflects the extent to which the total economic value of a negotiation hinges on the strength of a negotiator’s post-negotiation relationship with their counterpart. When should negotiators care relatively more about their relationships with their counterparts than about the deal terms? We introduce a new dimension to characterize negotiation contexts to answer this question: the Economic Relevance of Relational Outcomes (ERRO).
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