Business

Protection Is a Second Purchase

1:07 · 2026-10-28

An extended warranty offered at checkout is not an extension of the item you just chose; it is a separate product whose value depends on the price of the plan, what the terms actually cover, how likely the item is to fa…

Sources behind this episode

• peer-reviewed field surveysHow do people value extended warranties? Evidence from two field surveysHuysentruyt, M. and Read, D. (2010). Journal of Risk and Uncertainty, 40(3), 197-218
• peer-reviewed retail purchase-data studyWhy Do Consumers Buy Extended Service Contracts?Chen, T., Kalra, A. and Sun, B. (2009). Journal of Consumer Research, 36(4), 611-623
• peer-reviewed economics paper with panel data and experimentThe Effect of Product Misperception on Economic Outcomes: Evidence from the Extended Warranty MarketAbito, J. M. and Salant, Y. (2019). Review of Economic Studies, 86(6), 2285-2318
• peer-reviewed economic theoryShrouded Attributes, Consumer Myopia, and Information Suppression in Competitive MarketsGabaix, X. and Laibson, D. (2006). Quarterly Journal of Economics, 121(2), 505-540; NBER Working Paper w11755
• government consumer-protection guidanceExtended Warranties and Service ContractsFederal Trade Commission, Consumer Advice, March 2023 (page modified 2025)
• university research explainerNo, Extended Warranties Are Usually Not Worth ItKellogg Insight, Northwestern University, October 3, 2019, summarizing Abito and Salant
• nonprofit consumer-testing organization articleWhy You Should Steer Clear of Extended WarrantiesBraverman, B. (2018, December 22). Consumer Reports