The Power of Apology

Working paper

After an unsatisfactory purchase, many rms are quick to apologize to customers. It is, however, not clear why they should do that. As the apology is costless, it should be regarded as cheap talk and thus ignored by the customer. In this paper, we test in a controlled eld experiment whether apologizing in uences customers' subsequent behavior. We nd that apologizing yields much better outcomes for the rm than oering a monetary compensation.

Authors: Abeler, J; Calaki, J; Andree, K; Basek, C

• Publisher: University of Nottingham
• Series: CeDEx Discussion Paper Series
• Publication date: 2009-06-01
• Language: English