Brand effect on extended warranty valuation: Subjective value versus popularity

In five experiments, we explore the effect of brands on warranty valuation and the conditions under which two mechanisms – liking based and availability based – determine the effect. We explore the moderating role of focused deliberation, which accentuates the brand effect under availability mechanism but reduces the effect under subjective value-based mechanism. In Experiment 1, we consider brands that vary in terms of both subjective value and popularity. When a brand is better in both subjective value and popularity, it commands higher warranty WTP. Focused deliberation moderates this effect of brand on warranty valuation. In Experiment 2, we consider brands that vary only in terms of subjective values (but not popularity). While the warranty valuation of the two brands does not differ under no deliberation, deliberation decreases WTP for brands with higher subjective value. In Experiment 3, we consider brands that differ only in terms of popularity (and not subjective value). In this context, deliberation increases warranty WTP for the more popular brand. Experiments 2A and 3A use warranty choice as the dependent variable and conceptually replicate the effects obtained in experiments 2 and 3, respectively.