Information Acquisition and the Excess Refund Puzzle

  title={Information Acquisition and the Excess Refund Puzzle},
  author={Steven A. Matthews and Nicola G. Persico},
  journal={Penn Institute for Economic Research (PIER) Working Paper Series},
A buyer can learn her value for a returnable experience good by trying it out, with the option of returning the good for whatever refund the seller oers. Sellers tend to oer a "no questions asked"refund for such returns, a money back guarantee. The refund is often too generous, generating ine¢ ciently high levels of returns. We present two versions of a model of a returnable goods market. In the Information Acquisition Model, consumers are ex ante identical and uninformed of their private… 
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Information and Consumer Behavior
  • P. Nelson
  • Business, Economics
    Journal of Political Economy
  • 1970
Consumers are continually making choices among products, the consequences of which they are but dimly aware. Not only do consumers lack full information about the prices of goods, but their
Information Management in Incentive Problems
We extend the standard procurement model to examine how an agent is optimally induced to acquire valuable planning information before he choose an unobservable level of cost‐reducing effort. Concerns
Measurement Cost and the Organization of Markets
  • Y. Barzel
  • Economics
    The Journal of Law and Economics
  • 1982
PEOPLE will exchange only if they perceive what they get to be more valuable than what they give. To form such perceptions, the attributes of the traded items have to be measured. Some measurements