Did You Just Betray Me, My Friend? The Dark Side of Selling Extended Warranty

In four studies, this paper shows that the solicitation of ESC may cause harm to a firm. In study 1, we find that the solicitation of ESC decreases brand trust and reliability. This effect is found to be mediated by performance risk. We examine the psychological mechanism in study 2. When solicited with an ESC, consumers' betrayal aversion is activated and spills over to weakened trust more generally as measured by a trust game. We go on to examine betrayal aversion by directly manipulating betrayal vs. trust in study 3. The priming of betrayal increases performance risk and decreases both brand reliability and trust, replicating the effect in study 1. In study 4, we find that betrayal aversion is only activated when the relationship is built on a communal norm. The effect is attenuated when the relationship is built on an exchange norm.