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Apologies as Signals: With Evidence from a Trust Game

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  • Benjamin Ho

    () (Department of Economics, Vassar College, Poughkeepsie, New York 12604)

Abstract

Apologies are part of a social institution designed to restore frayed relationships not only in daily life but also in the domains of corporate governance, medical malpractice litigation, political reputation, organizational culture, etc. The theory shows that in a general class of moral hazard games with imperfect information about agents with two-dimensional type, apologies exhibit regular properties--e.g., apologies are more frequent in long relationships, early in relationships, and between better-matched partners. A variant of the trust game demonstrates that communication matters in a manner consistent with economic theory; specifically, the words "I am sorry" appear to select equilibrium behavior consistent with the theory's main predictions. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

Suggested Citation

  • Benjamin Ho, 2012. "Apologies as Signals: With Evidence from a Trust Game," Management Science, INFORMS, vol. 58(1), pages 141-158, January.
    • Handle: RePEc:inm:ormnsc:v:58:y:2012:i:1:p:141-158
    DOI: 10.1287/mnsc.1110.1410
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    File URL: http://dx.doi.org/10.1287/mnsc.1110.1410
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Schniter, Eric & Sheremeta, Roman, 2014. "Predictable and Predictive Emotions: Explaining Cheap Signals and Trust Re-Extension," MPRA Paper 59665, University Library of Munich, Germany.
    2. Srivastava, Vatsalya, 2016. "The Sorry Clause," Other publications TiSEM 9340f3b1-ebf3-46b9-8ffd-3, Tilburg University, School of Economics and Management.
    3. Diego Gambetta & Wojtek Przepiorka, 2014. "Natural and Strategic Generosity as Signals of Trustworthiness," PLOS ONE, Public Library of Science, vol. 9(5), pages 1-9, May.
    4. Srivastava, Vatsalya, 2017. "The Sorry Clause (revision of CentER DP 2016-008)," Discussion Paper 2017-002, Tilburg University, Center for Economic Research.
    5. Fischbacher, Urs & Utikal, Verena, 2013. "On the acceptance of apologies," Games and Economic Behavior, Elsevier, vol. 82(C), pages 592-608.
    6. Basil Halperin & Benjamin Ho & John List & Ian Muir, 2018. "Toward an understanding of the economics of apologies: evidence from a large-scale natural field experiment," Natural Field Experiments 00644, The Field Experiments Website.
    7. Srivastava, Vatsalya, 2017. "The Sorry Clause (Revision of TILEC DP 2016-004)," Discussion Paper 2017-002, Tilburg University, Tilburg Law and Economic Center.
    8. Srivastava, Vatsalya, 2016. "The Sorry Clause," Discussion Paper 2016-008, Tilburg University, Center for Economic Research.
    9. Verena Utikal, 2013. "I am sorry - Honest and fake apologies," TWI Research Paper Series 81, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    10. Srivastava, Vatsalya, 2016. "The Sorry Clause," Other publications TiSEM 51d65f16-812c-4fbd-9cd2-f, Tilburg University, School of Economics and Management.
    11. Marie Racine & Craig Wilson & Michael Wynes, 2020. "The Value of Apology: How do Corporate Apologies Moderate the Stock Market Reaction to Non-Financial Corporate Crises?," Journal of Business Ethics, Springer, vol. 163(3), pages 485-505, May.
    12. Cailin O'Connor, 2019. "Methods, Models, and the Evolution of Moral Psychology," Papers 1909.09198, arXiv.org.
    13. 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.
    14. Srivastava, Vatsalya, 2017. "The Sorry Clause (Revision of TILEC DP 2016-004)," Other publications TiSEM 5925920e-05c6-4ae0-8e76-d, Tilburg University, School of Economics and Management.
    15. Srivastava, Vatsalya, 2017. "The Sorry Clause (revision of CentER DP 2016-008)," Other publications TiSEM 252e9410-4c9f-4a40-9ab7-a, Tilburg University, School of Economics and Management.
    16. Srivastava, Vatsalya, 2016. "The Sorry Clause," Discussion Paper 2016-004, Tilburg University, Tilburg Law and Economic Center.

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