A CONSUMER-SIDE EXPERIMENTAL EXAMINATION OF SIGNALING THEORY - DO CONSUMERS PERCEIVE WARRANTIES AS SIGNALS OF QUALITY

This article examines consumers' perceptions of warranties within the framework of economic signaling theory. We develop propositions about conditions under which higher warranties may lead to higher, lower, or the same quality perceptions as do lower warranties. These quality pe rceptions of consumers are consistent with different types of market e quilibria predicted by signaling theory. The propositions are tested i n an experiment which varies warranty length, warranty scope, and the conditions for warranty signaling. Results suggest that, in general, c onsumer responses to warranties are consistent with the behavioral ass umptions of signaling theory. The authors suggest that consumer resear chers can gain greater insight by integrating signaling theory with ps ychologically based approaches.