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The Power of Apology

Abstract:
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.

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Publisher copy:
10.1016/j.econlet.2010.01.033

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Journal:
Economics Letters
Volume:
7
Issue:
2
Publication date:
2010-05-05
DOI:
URN:
uuid:ec5a3658-e3cb-4119-b896-1cc0f00f8ac5
Local pid:
oai:economics.ouls.ox.ac.uk:15284
Language:
English

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