Template-Type: ReDIF-Paper 1.0 Author-Name: Ben Gilbert Author-Name-First: Ben Author-Name-Last: Gilbert Author-Email: bgilbert@mines.edu Author-Workplace-Name: Division of Economics and Business, Colorado School of Mines Author-Name: Alexander James Author-Name-First: Alexander Author-Name-Last: James Author-Email: alex.james@uaa.alaska.edu Author-Workplace-Name: Department of Economics and Public Policy, University of Alaska Anchorage Author-Name: Jason Shogren Author-Name-First: Jason Author-Name-Last: Shogren Author-Email: jramses@uwyo.edu Author-Workplace-Name: Department of Economics, University of Wyoming Title: Corporate Apology for Environmental Damage Abstract: Apologies are a powerful way to restore trust and reduce punishment costs in bilateral settings. But what do we know about public apologies for large scale man-made disasters? Herein we report on results from an experiment with apologies in a multilateral setting: a firm-caused environmental disaster. Subjects read about an oil spill scenario, and learned whether the oil firm made a full apology, a partial apology, or no apology, and whether the firm had a good, bad, or no environmental reputation. A partial apology is one that fails to accept full material responsibility for damages, such as by shifting the blame to another party. We find that full apologies and better reputation reduce the demand for punishment. However, full apologies and reputation are substitutes, with reputation being significantly more important. Additionally, apologies do not reduce the demand for compensation and may increase it if the firm is clearly a bad actor, or if admission of guilt is the only information subjects have. Our results help explain corporate social responsibility investments and greenwashing, and why many public apologies over an environmental disaster are only partial apologies. Creation-date: 2017-09 Number: 2017-02 Handle: RePEc:ala:wpaper:2017-02 File-URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201702.pdf File-Format: Application/pdf Classification-JEL: Q54, L14 Keywords: apologies, environmental disaster, oil spill, cheap talk