Are Warranties Accurate Signals of Product Reliability?

Joshua Lyle Wiener

169 citations0/0 files storedJournal of Consumer Research

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Consumer Market Behavior and Pricing Customer Service Quality and Loyalty Consumer Behavior and Marketing Influence

Abstract

A major goal of the 1975 Magnuson-Moss Warranty-Federal Trade Commission Improvement Act was to create a market place in which a product's warranty would be an accurate signal of its reliability. Appliances and motor vehicles were studied empirically to determine whether warranties actually do serve as reliability signals. The results of the study show that even after controlling for other cues, warranties are accurate signals.

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1970The Market for "Lemons": Quality Uncertainty and the Market Mechanism 1971Price, brand name, and product composition characteristics as determinants of perceived quality.1977Consumer Misperceptions, Product Failure and Producer Liability

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