Extended Warranty

Extended Warranty

Reviewed by Faisal Zaidi

An optional contract sold with a product that promises repair or replacement for a set period beyond the standard cover.

What it is

Field surveys found that consumers overestimated breakdowns, yet this did not fully explain purchases, and the expected emotional benefit of holding one was the strongest predictor of buying. It is drawn from work by Marieke Huysentruyt and Daniel Read (2010).

In effect

In the article on why we buy extended warranties, it serves as the product whose purchase the studies examine.

What it does not say

The surveys describe how buyers valued cover. They do not say that cover is a good or a poor purchase for any product, and nothing here is financial advice.

Sources

  1. Huysentruyt, M., & Read, D. (2010). How do people value extended warranties? Evidence from two field surveys. Journal of Risk and Uncertainty, 40(3), 197-218.
  2. Kim, D., & Nayakankuppam, D. (2023). When to present an extended warranty: Pre- vs. post-purchasing a product. Psychology & Marketing, 40(9), 1821-1829.