The Neurophysiology of Corporate Apologies: Why Do People Believe Insincere Apologies?

Abstract

CEOs typically offer apologies after transgressions are discovered whether mistakes were corrected or not. Seemingly insincere apologies, however, may damage the company by impugning its reputation. This study uses neurophysiologic data to identify why people believe apologies and identify when resolutions have occurred. Participants watched videos of corporate apologies and earned $3 for each video they watched. They could wager any of their earnings on whether the mistake was resolved with a chance to double their money. Participants could not consciously identify problem resolution, but the similarity of electrodermal activity and a measure of sympathetic and parasympathetic switching could with 61.3% accuracy (p =.001). Wagers were unrelated to whether problems were resolved or not. Yet electrodermal activity components predicted whether a wager was made with 75% accuracy (p =.001). Analysis of physiologic data showed that when leaders identify the problem in an opening statement, address the audience directly, use concrete language to describe how the company will remedy the problem, and minimize the harm done, physiologic arousal is reduced, signaling that the problem will be resolved. Our analysis shows that people believe insincere apologies when the statements made, whether truthful or not, produce a calming effect in listeners.