When Negotiation Hurts and When It Doesn’t: Relational Consequences of Negotiation in Rental Markets

Abstract

Negotiation is widely encouraged as a means of improving economic outcomes, yet concerns persist that negotiating may undermine interpersonal relationships. Integrating research on negotiation, relationships, and social norms, I argue that the relational consequences of negotiation depend on whether negotiating aligns with contextual norms. Using 19-month longitudinal field data from the U.S. rental real estate market (N = 2,678 tenants), I examined how the occurrence of a negotiation predicts tenants’ subjective value during lease signing and downstream behavioral outcomes. Tenants who negotiated during the lease-signing process reported lower subjective value than those who did not, but only when negotiation was perceived as violating prevailing norms. Specifically, the perception that the landlord had communicated lease terms were negotiable—particularly the perception that this was communicated publicly— and perceived market conditions favorable to tenants attenuated or eliminated these negative associations. Lower subjective value, in turn, predicted shorter planned length of stay, which subsequently predicted a shorter actual tenancy one year later. These findings show that negotiation is not inherently harmful to relationships; rather, its interpersonal consequences hinge on normative context. By identifying social norms as a key boundary condition, this research advances understanding of when negotiation undermines relationships and how early interactions shape long-term outcomes.