Information Acquisition and Refunds for Returns

@article{Matthews2007InformationAA,
  title={Information Acquisition and Refunds for Returns},
  author={Steven A. Matthews and Nicola Persico},
  journal={Corporate Finance: Valuation},
  year={2007}
}
A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of learning their values this way. Increasingly, however, consumers can instead learn about their values before they purchase by, e.g., reading product reviews or consulting experts. We study the effect on… 
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