Apologies and Settlement Levers

Abstract

This study uses experimental methods to explore the role of apologies in legal settlement negotiation. Specifically, the study examines the influences of apologies on disputants' perceptions, and the effects of apologies on a number of judgments that influence negotiation outcomes -- settlement levers such as reservation prices, aspirations, and judgments of fair settlement amounts. Five-hundred fifty-six participants were asked to take the role of potential plaintiffs, to provide their reactions to an experimental scenario, and to indicate the values they would set for each settlement lever. The nature of the communication with the offender and the description of the evidentiary rule governing the admissibility of the offender's statement were manipulated. The data suggest that apologies can promote settlement by altering the injured parties' perceptions of the situation and the offender so as to make them more amenable to settlement discussions and by altering the values of the injured parties' settlement levers in ways that are likely to increase the chances of settlement. The results suggest further, however, that the nature of the apology itself as well as the factural circumstances surrounding the incident may play important roles in how apologies are understood.

Keywords: apology, settlement, negotiation, decision making

JEL Classification: K13, K41