Regret from Postpurchase Discovery of Lower Market Prices: Do Price Refunds Help?

Abstract

Consumer regret can result in unfavorable outcomes for marketers. To prevent regret, many retailers promise to refund money to consumers who discover lower prices after purchase. The authors show that a refund's effect on felt regret depends on how consumers view these promises. If consumers mainly view them as protective tools (i.e., adopt a protection focus), postrefund regret is minimal. If consumers primarily view such promises as sources of information about the retailer's price status (i.e., adopt an information focus), regret persists even after refund. The authors show that regret persists with these consumers because finding a lower price results in a perception of trust violation. They find that subject to boundary conditions, using a disclaimer that states that the retailer does not claim to offer the lowest prices helps avoid this negative outcome for information-focused consumers. The authors contribute to the literature on outcome reversibility and regret by showing that outcome reversal does not necessarily obviate regret. In addition, they show that regulatory focus serves as the motivational basis for how consumers view refund promises.