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Apologies as Signals: With Evidence from a Trust Game

Johnson School Research Paper Series

54 Pages Posted: 12 Nov 2006 Last revised: 17 Oct 2007

Benjamin Ho

Vassar College

Date Written: October 2007

Abstract

Apology is a social institution used to restore frayed relationships. It is relevant in daily interactions but also in medical malpractice, political reputation, corporate culture, etc. The theory presented shows that in a general class of moral hazard games with imperfect information about agents with two-dimensional type, the act of apology exhibits 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 theory; specifically, the words "I am sorry" appear to select equilibrium behavior consistent with each of the theory's main predictions.

Keywords: apologies, remorse, signaling, trust game, empathy, attribution theory

JEL Classification: C72, D82, L14, D23

Suggested Citation

Ho, Benjamin, Apologies as Signals: With Evidence from a Trust Game (October 2007). Available at SSRN: https://ssrn.com/abstract=944161 or http://dx.doi.org/10.2139/ssrn.944161

Benjamin Ho (Contact Author)

Vassar College ( email )

124 Raymond Avenue
Poughkeepsie, NY 12604
United States

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