An Experimental Study of Warranty Coverage and Dispute Resolution in Competitive Markets

Abstract

In service and product markets where warranties are offered, disputes over warranty performance frequently occur between buyer and seller. Resolving such disputes in a fair and effective way has become an increasingly important and controversial question in recent years. Some observers have gone so far as to argue that the pervasiveness of such disputes and the inability to resolve them effectively is having a corrosive effect on society.1 This is probably somewhat extreme, but even a less excited perspective suggests that the design of procedures to handle consumer disputes is a matter for serious concern.