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The Effect of Product Misperception on Economic Outcomes: Evidence from the Extended Warranty Market

peer-reviewed economics paper with panel data and experiment Abito, J. M. and Salant, Y. (2019). Review of Economic Studies, 86(6), 2285-2318

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“Demand and profits in the extended warranty market are driven by consumers overestimating failure probability rather than risk aversion or seller market power; failure-rate information significantly reduces willingness to pay”

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