We present two information-based rationales for why sellers of returnable goods tend to offer refunds in excess of the salvage value of the good. Both explanations require at least the potential presence of consumers who can choose to learn their values for the good prior to purchasing.

A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of...

A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of...

A buyer can learn her value for a returnable experience good by trying it out, with the option of returning the good for whatever refund the seller offers. Sellers tend to offer a “no questions asked” refund for such returns, a money back guarantee. The refund is often too generous,...

A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of...

We present a model of private production of information in collective decision making. Agents gather costly information, and then aggregate it to produce a collective decision. Because information is a public good, it will be underprovided relative to the social optimum. A ``good'' mechanism...