A BEJEAP Topics article.

Abstract

The impact of retail return policy on consumer behavior has not drawn enough attention from researchers. Lenient return policies insure consumers against having regret after purchasing, so they may increase consumers' likelihood of purchasing. The behavioral theory of endowment effect suggests that consumers may then have a harder time returning purchased goods because people value objects more highly once they own them. We conducted a test of our hypotheses on how return policy and endowment effect influence purchasing tendency and return rate. This experiment proved that endowment effect did affect the returning behavior of consumers. It showed that lenient return policies significantly increased initial purchasing tendency but did not increase return rate. This suggests a potential to increase consumption by adopting lenient return policies.

Submitted: April 26, 2009 · Accepted: August 31, 2009 · Published: September 10, 2009

Recommended Citation

Wang, Xianghong (2009) "Retail Return Policy, Endowment Effect, and Consumption Propensity: An Experimental Study," The B.E. Journal of Economic Analysis & Policy: Vol. 9 : Iss. 1 (Topics), Article 38.
DOI: 10.2202/1935-1682.2288
Available at: http://www.bepress.com/bejeap/vol9/iss1/art38