Impact of Refund Policy on Sales of Paid Information Services: The Moderating Role of Product Characteristics

44 Pages Posted: 25 May 2022

See all articles by Huiyan Chen

Huiyan Chen

University of Connecticut - Department of Operations & Information Management

Jing Peng

University of Connecticut - Department of Operations & Information Management

Hongfei Li

Chinese University of Hong Kong

Ramesh Shankar

University of Connecticut - Department of Operations & Information Management

Date Written: May 18, 2022

Abstract

There has been a proliferation of online knowledge-sharing services such as Quora and StackOverflow. While knowledge-sharing is typically free, some platforms (e.g., Zhihu.com) recently started to offer paid information services. Although prior studies have explored the impact of financial incentives on the supply (e.g., quantity and quality) of free knowledge-sharing, it remains unclear what affects the demand for paid information services. In this paper, we examine the effect of enabling product returns on the sales of paid information services. Using data collected from Zhihu, the largest knowledge platform in China, we find that enabling product returns has a positive effect on the demand for paid information services. However, enabling product returns has differential effects on early vs. late sales, sales of utilitarian vs. hedonic topics, as well as on the sales of information services with high vs. low perceived quality. Specifically, enabling product returns has a negative effect on early sales but a positive effect on late sales, which is surprising because early buyers face greater risk regarding service quality than late buyers, due to the absence of quality signals such as reviews in the early stage. Next, enabling product returns is more effective for utilitarian information services than for hedonic ones. Moreover, enabling product returns is more effective for information services with lower perceived quality. Our findings offer fresh insights into the demand for paid information services and have important implications for knowledge-sharing platforms and knowledge contributors.

Keywords: information services, refund policy, hedonic, utilitarian, perceived quality

Suggested Citation

Chen, Huiyan and Peng, Jing and Li, Hongfei and Shankar, Ramesh, Impact of Refund Policy on Sales of Paid Information Services: The Moderating Role of Product Characteristics (May 18, 2022). Available at SSRN: https://ssrn.com/abstract=4114972 or http://dx.doi.org/10.2139/ssrn.4114972

Huiyan Chen

University of Connecticut - Department of Operations & Information Management ( email )

2100 Hillside Rd
Unit 407
Storrs, CT CT 06269
United States
06269 (Fax)

Jing Peng (Contact Author)

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Hongfei Li

Chinese University of Hong Kong

39439679 (Phone)
999077 (Fax)

HOME PAGE: http://www.bschool.cuhk.edu.hk/staff/li-hongfei/

Ramesh Shankar

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States
860-486-5217 (Phone)
860-486-4839 (Fax)

HOME PAGE: http://www.sramesh.com/

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