In this paper we focus on two types of risks, the risk of malfunctioning of a product quantified by its reliability, and the risk of misunderstanding the features and qualities of a product while deciding whether to buy it. The later risk is caused by the information asymmetry, which is a natural property of any communication process. We discuss the relationship between these risks and product warranty. We begin with an overview of warranties from the decision-makers' viewpoint. We elaborate on the purposes, legalities, and types of warranties and follow with a summary of mathematical models and concepts for quantifying the financial implications of warranties of malfunctioning. Further, we propose a model for quantifying the risk of misinforming and elaborate on the relationship between this risk and product warranty.
The problem of enhancing success in e-Commerce requires reducing or sharing the risk of misinforming. The objectives of this paper is to raise and discuss the difficulties in quantifying the risk of misunderstanding caused by information asymmetry in a communication process; and to propose a mathematical model, developed to measure the risk of misinforming. Usage of warranty, as the most popular tool of sharing risk, is discussed in the light of risks of misinforming. A data set collected in an experiment, was used to illustrate the major ideas proposed as well as to stress on the fact that in particular circumstances this kind of risk is not understood by clients, which often leads to wrong decisions.
Nowadays the product warranty is considered to be a valuable attribute of the product. It is a tool to enforce the competing power of the producer on the market place. There are two types of problems the product warranty addresses. Firstly, warranty deals with the malfunctioning of the product and, secondly, it addresses the information asymmetry, i.e., the misunderstanding and misinterpretation of the features and qualities of the product. The second aspect is of great importance in the light of indirect business communication, as in e-commerce. The aim of this paper is quantifying the risk of misunderstanding caused by information asymmetry and defining an appropriate product warranty policy, which depends on this risk.
Nowadays the product warranty plays increasingly important role in any business transaction. It is a valuable attribute of the product and it is used extensively in marketing and advertising. It is a tool to enforce the competing power of the producer on the market place. There is a vast literature on the product warranty related to the product malfunctioning. In this study we address another type of warranty -the warranty of misinforming, which of great importance in the light of indirect business communication, as in e-commerce. Here, we extend previous studies, aiming to provide a more realistic model for quantifying the risk of misinforming caused by information asymmetry. We propose an approach for evaluating the degree of acceptance of the product with respect to individual tasks, which previously was assumed to be a known constant.
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