The Economics of Apologies

I’m a big fan of people offering their apologies for when they have done something wrong.

In fact, I apologize that you have somehow come across this post and started reading it.

I’ve written about this before (Why Is It So Hard for Some People to Admit They Are Wrong), and in that post included a clip that I will always remember from Happy Days:

Not being willing to apologize or admit wrongdoing was perhaps the biggest problem I had with former President Trump.

So I was happy to see that Dan Ariely addresses this issue in an email he received from a reader this week:

Dear Dan,

I run an Etsy business. A few weeks ago I made some mistakes and sent several long-term customers the wrong items. What should I do to keep their business and earn back their trust? —Adrien

And here was Dan’s reply:

Running a small business is challenging, and mistakes will happen from time to time. Fortunately, a well-executed apology and stellar follow-up service can help. In a 2019 study on the “economics of apologies,” researchers looked at a large set of vendors and over a million of their customers and came away with four main insights about effective apologies.

  • First, make sure to recognize the impact of your mistake on your customer: “I know it was disappointing not to have the right gift in time for the holiday.”
  • Second, explain what you are doing to make sure it won’t happen again.
  • Third, the apology must come at some cost to you. Customers who had a bad experience were more likely to continue their patronage when they were sent a coupon for future purchases.
  • Finally, make sure to improve. An apology can actually be worse than no apology at all if the mistake is repeated.

By the way, the same principles are relevant when making a personal apology to friends or family.

So let me try and offer an effective apology to anyone who has read this far into my post:

  • First, I know you have much better things to do with your time.
  • Second, I am trying to make the titles of my blog extra boring, so as to scare off potential readers. Example: The Downside of a Company  Having Too High a Current Ratio
  • Third, here is a free coupon that allows you to skip over my blog when using the WordPress Reader:
  • Fourth, I will share my stats that hopefully shows my readership going down over the next few weeks.

That’s what an effective apology looks like, so thank you Dan, for setting me straight.

I apologize for having associated your brilliant work on behavioral economics with my ridiculous blather.


47 thoughts on “The Economics of Apologies

  1. This was a bit redundant. I think you should apologize for saying you’re sorry, so much. And please, throw in some extra groveling with that apology.

    If you feel insulted by this comment, please accept my sincerest apology. I was wrrrrrruhhhohhong.

    Liked by 2 people

  2. Do you know if the Borden Blather coupon will get me special discounts at my favorite stores? I’d like to pull it out and earn some street cred.

    A sincere apology goes a long way. Most people are willing to give somebody a second chance as long as the feelings are genuine.

    How about those athletes that say, “I’m not going to make any excuses ” when they lose and then proceed to give ten bad ones? As you say, a bad apology is worse than no apology in some circumstances. I think that’s Marketing 101 when someone is trying to rehabilitate their image.

    Liked by 2 people

    1. my coupon might be good at Sears, they are probably desperate enough to accept it.

      and yes, the apology needs to be sincere, but sometimes it’s hard to tell. I’ve been watching the Gov. Cuomo news, and as an outsider, his apology seems to be sincere to me, but the women, and man others, don’t seem to think so. And I’m sure part of it is trying to rehab his image, as you note…

      Liked by 1 person

  3. I do agree that a genuine apology, and the appropriate corrective actions that follow, can fix most relationships be they professional or personal. And though there are likely things you can apologize for (a statement that applies to all of us), your blog is not one of them. Regardless of your day-to-day stat fluctuations, you followers continue to grow and grow. Not sure that kind of readership is making your point for this post. But, in the theme of your post, let me offer my own apology. I apologize that I truly do not have something better to do with my time than read your blog.

    Liked by 3 people

    1. I agree that a genuine apology can go a long way in fixing a relationship.

      and assuming you don’t read Russian, reading a Russian newspaper would be a better use of your time… 🙂

      Liked by 1 person

  4. it’s all about the sincerity. we never ask our kinder to say ‘I’m sorry’ right away if someone is hurt, in feelings or body. it’s often just going through the motions. instead, we ask them to look at the person and ask, ‘are you okay?”. whether they reply yes or no, they then ask, “what can I do to make it better?”. sometimes the ‘victim’ will ask for an apology, but it’s often a hug, asking them to play with them, or saying “I won’t do it again or I’ll be more careful.” it’s amazing.

    though I am also a fan of coupons as an adult…just saying

    Liked by 2 people

    1. what a great way for kids to learn how to be genuine with their apology. as usual, as adults we would be so much better behaved if we just remembered what we were taught in kindergarten.

      And I hope my coupon works for you…; if not, my apologies…

      Liked by 1 person

  5. What’s all this talk about apologies. Its a hoax folks, a witch hunt. I would apologize but frankly everything I’ve done has been perfect. If I ever apologized if it would be like something the world has never seen before. When I apologize, you will apologize too. You will apologize so much you will get tired of apologizing. I promise. And I’d make a lot of money doing it, but I’m so rich already.

    Liked by 3 people

  6. Haha, Jim, I like blogging and see no better use of my free time than reading your blog. I got really good at writing this sort of apology letter when my clients used to travers the stock exchange’s listings requirements. I used to follow this exact four-step plan. Hmmm! Great minds think alike OR fools seldom differ. Have a great day, Jim.

    Liked by 1 person

  7. Can the voucher be applied across other blogs?

    Interesting take on apologies, I think a discount is always a gesture. I remember once in a restaurant when we got the bill we had 15% off because of how long we were waiting. My wife and I had been so engrossed in conversation we were oblivious it had taken so long so not fussed with the wait.

    Still a nice gesture though!

    Liked by 1 person

  8. A sincere apology is can always go a long way and I think apologizing to your children is important. Parent’s need to admit that we make mistakes too. Some parent’s think that makes them look smaller in their child’s eyes, but I think it makes them but I think it makes them look bigger.
    On a humorous note, I may have done my share of sarcastic apologies , but just to certain bloggers, AKA stooges, who deserved it. LOL!

    Liked by 1 person

  9. Haha, No one apologies like the Fonz…someone mentioned children and I agree as parents we should apologise if we are wrong it teaches the kids that’s its ok to be wrong sometimes and ok to apologise if necessary 🙂 x

    Liked by 2 people

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