How powerful is an apology?


Cheap-talk apologies to angry customers produce better results than offering money:

How should firms react to customer complaints after an unsatisfactory purchase? In a field experiment, we test the effect of different reactions and find that a cheap-talk apology yields significantly better outcomes for the firm than offering a monetary compensation.

Source: “The power of apology” from¬†Economics Letters,¬†Volume 107, Issue 2, May 2010, Pages 233-235

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