A Consumer Perspective on Price-Matching Refund Policies: Effect on Price Perceptions and Search Behavior

Joydeep Srivastava and Nicholas Lurie

Journal of Consumer Research, 2001, vol. 28, issue 2, 296-307

Abstract: Although price-matching refund policies are common in many retail environments, the impact of such policies on consumers has largely been ignored. This article reports the results of three studies that examine price-matching policies from a consumer perspective. Study 1 shows that consumers perceive price-matching policies as signals of low store prices and that the presence of a refund increases the likelihood of discontinuing price search. Contrary to the predictions based on signaling theory in information economics, studies 2 and 3 show that when search costs are low, the number of stores searched increases in the presence versus absence of a price-matching policy. When search costs are high, consumers appear to accept the price-matching signal at face value and search less in the presence of a refund. The article concludes by discussing the theoretical implications of the findings and suggesting directions for future research. Copyright 2001 by the University of Chicago.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jconrs:v:28:y:2001:i:2:p:296-307

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