Demonstrations and money-back guarantees: Market mechanisms to reduce uncertainty

Amir Heiman*, Bruce McWilliams, David Zilberman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

93 Scopus citations

Abstract

This paper analyzes consumer, retailer and manufacturer preferences for use of two important risk reduction tools: money-back guarantees and demonstrations. Theoretical findings from economics, marketing, consumer behavior and psychology are integrated to analyze the performance of these mechanisms under various conditions and product characteristics. The paper investigates the relationship between these two risk reduction mechanisms and reveals in which ways the two are complements or substitutes, identifying under which conditions money-back guarantees and demonstrations will be used separately, together, or not at all.

Original languageAmerican English
Pages (from-to)71-84
Number of pages14
JournalJournal of Business Research
Volume54
Issue number1
DOIs
StatePublished - Oct 2001

Bibliographical note

Funding Information:
The authors acknowledge the financial support of the Israeli Academy of Science for this paper.

Keywords

  • Demonstrations
  • Learning risk
  • Money-back guarantees
  • Uncertainty

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