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Toward an understanding of the economics of apologies: evidence from a large-scale natural field experiment

Author

Listed:
  • Basil Halperin
  • Benjamin Ho
  • John List
  • Ian Muir

Abstract

We use a theory of apologies to analyze a nationwide field experiment involving 1.5 million Uber ridesharing consumers who experienced late rides. Several insights emerge. First, apologies are not a panacea: the efficacy of an apology and whether it may backfire depend on how the apology is made. Second, across treatments, money speaks louder than words - the best form of apology is to include a coupon for a future trip. Third, in some cases sending an apology is worse than sending nothing at all, particularly for repeated apologies. For firms, caveat venditor should be the rule when considering apologies.

Suggested Citation

  • 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.
  • Handle: RePEc:feb:natura:00644
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    References listed on IDEAS

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    3. repec:kap:jrisku:v:56:y:2018:i:1:d:10.1007_s11166-018-9276-4 is not listed on IDEAS
    4. 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.
    5. Abeler, Johannes & Calaki, Juljana & Andree, Kai & Basek, Christoph, 2010. "The power of apology," Economics Letters, Elsevier, vol. 107(2), pages 233-235, May.
      • Johannes Abeler & Juljana Calaki & Kai Andree & Christoph Basek, 2009. "The Power of Apology," Discussion Papers 2009-12, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
      • Johannes Abeler & Juljana Calaki & Kai Andree & Christoph Basek, 2009. "The Power of Apology," Discussion Papers 2009-12, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
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    8. Benjamin Ho & Elaine Liu, 2011. "Does sorry work? The impact of apology laws on medical malpractice," Journal of Risk and Uncertainty, Springer, vol. 43(2), pages 141-167, October.
    9. Ernst Fehr & John A. List, 2004. "The Hidden Costs and Returns of Incentives-Trust and Trustworthiness Among CEOs," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 743-771, September.
    10. Benjamin Ho, 2012. "Apologies as Signals: With Evidence from a Trust Game," Management Science, INFORMS, vol. 58(1), pages 141-158, January.
    11. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
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