Warranty Signalling and Reputation

In this paper, we present a signalling-based explanation for the empirical phenomenon that a longer warranty may be offered by a product with lower quality. Our explanation hinges on differences in consumer knowledge about reliability of established and newer products. In a product market where a new entrant competes with an established product, we show that signalling behavior leads to an outcome where the less reliable product may carry the longer warranty.

• 저널Management Science · 47(9) · 1282–1289
• 토픽Consumer Market Behavior and Pricing · Marketing
• DOI10.1287/mnsc.47.9.1282.9783
• 저자Subramanian Balachander