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.

We investigate social norms for dictator game giving using a recently proposed norm-elicitation procedure (Krupka and Weber, 2013). We elicit norms separately from dictator, recipient, and disinterested third party respondents and find that elicited norms are stable and insensitive to the role...