A consumer perspective on price-matching refund policies: Effect on price perceptions and search behavior

Although price-matching refund policies are common in many retail environme nts, the impact of such policies on consumers has largely been ignored. Thi s 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 presen ce of a refund increases the likelihood of discontinuing price search. Cont rary 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 polic y. When search costs are high, consumers appear to accept the price-matchin g signal at face value and search less in the presence of a refund. The art icle concludes by discussing the theoretical implications of the findings a nd suggesting directions for future research.