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To pay or to apologize? On the psychology of dealing with unfair offers in a dictator game

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  • De Cremer, David

Abstract

Prior research has largely failed to focus on how transgressors can promote trust when having made unfair offers in bargaining. I investigated in the context of receiving an unfair offer in a dictator game when financial compensations and when apologies are most effective in motivating trust behavior by the violated party. I hypothesized that when losses were allocated, the violated party would be motivated to show more trust behavior towards the transgressor when a financial compensation (resulting again in equal final outcomes) relative to an apology was delivered, whereas when gains were allocated, apologies would be more effective in promoting trust behavior than a financial compensation. Results from a laboratory study indeed supported this prediction as such demonstrating the importance of how allocation decisions are framed (i.e., loss or gain) in testing the effectiveness of trust repair strategies (financial compensations vs. apologies).

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  • De Cremer, David, 2010. "To pay or to apologize? On the psychology of dealing with unfair offers in a dictator game," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 843-848, December.
    • Handle: RePEc:eee:joepsy:v:31:y:2010:i:6:p:843-848
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    1. Desmet, Pieter T.M. & Leunissen, Joost M., 2014. "How many pennies for your pain? Willingness to compensate as a function of expected future interaction and intentionality feedback," Journal of Economic Psychology, Elsevier, vol. 43(C), pages 105-113.
    2. Natàlia Cugueró-Escofet & Marion Fortin & Miguel-Angel Canela, 2014. "Righting the Wrong for Third Parties: How Monetary Compensation, Procedure Changes and Apologies Can Restore Justice for Observers of Injustice," Journal of Business Ethics, Springer, vol. 122(2), pages 253-268, June.
    3. Ben Gilbert & Alexander James & Jason F. Shogren, 2018. "Corporate apology for environmental damage," Journal of Risk and Uncertainty, Springer, vol. 56(1), pages 51-81, February.
    4. François Cochard & Alexandre Flage, 2023. "Sharing Losses in Dictator and Ultimatum Games: A Meta-Analysis," Working Papers 2023-09, CRESE.
    5. Haesevoets, Tessa & Reinders Folmer, Chris & De Cremer, David & Van Hiel, Alain, 2013. "Money isn’t all that matters: The use of financial compensation and apologies to preserve relationships in the aftermath of distributive harm," Journal of Economic Psychology, Elsevier, vol. 35(C), pages 95-107.
    6. Gasparotto, Lisiane Santos & Pacheco, Natália Araujo & Basso, Kenny & Corte, Vitor Francisco Dalla & Rabello, Gisele Costa & Gallon, Shalimar, 2018. "The role of regulation and financial compensation on trust recovery," Australasian marketing journal, Elsevier, vol. 26(1), pages 10-16.
    7. van Gils, Suzanne & Horton, Kate E., 2019. "How can ethical brands respond to service failures? Understanding how moral identity motivates compensation preferences through self-consistency and social approval," Journal of Business Research, Elsevier, vol. 95(C), pages 455-463.
    8. Kähkönen, T. & Blomqvist, K. & Gillespie, N. & Vanhala, M., 2021. "Employee trust repair: A systematic review of 20 years of empirical research and future research directions," Journal of Business Research, Elsevier, vol. 130(C), pages 98-109.
    9. Guerra Alice & Parisi Francesco, 2022. "Injurers versus Victims: (A)Symmetric Reactions to Symmetric Risks," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 22(2), pages 603-620, June.
    10. Leunissen, Joost M. & Cremer, David De & Reinders Folmer, Christopher P., 2012. "An instrumental perspective on apologizing in bargaining: The importance of forgiveness to apologize," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 215-222.
    11. Pieter Desmet & David Cremer & Eric Dijk, 2010. "On the Psychology of Financial Compensations to Restore Fairness Transgressions: When Intentions Determine Value," Journal of Business Ethics, Springer, vol. 95(1), pages 105-115, September.

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