Extended warranty protects from future negative affect

Purpose Extended warranties typically have a negative expected value, as they charge high premiums (10–50% of the product price) while product failure rates in the initial years remain low (typically below 5%). Therefore, experts advise against purchasing them. However, many consumers still do. This paper aims to examine how the difficulty consumers experience when choosing products influences their decision to purchase an extended warranty. Difficult product choices often evoke negative affect, and this paper proposes that consumers experiencing greater choice-induced negative affect are more likely to purchase a warranty. Such plans guarantee product replacement or repair during the coverage period, effectively shielding consumers from future similar choice decisions. By mitigating potential future discomfort, extended warranties serve as a psychological safeguard against recurring negative emotions associated with difficult choices. Design/methodology/approach This paper tested authors’ hypotheses across four studies: three experimental studies, including one with consequential choice, and one study analyzing actual consumer choices. Study 1 included 293 MTurk participants, Study 2 included 286 MTurk participants, Study 3 comprised 267 undergraduate students in a consequential choice experiment, and Study 4 examined the actual purchase decisions of 981 MTurk participants. Findings It finds that greater choice difficulty increases the likelihood of purchasing an extended warranty. This effect emerges when consumers pursue maximizing goals (Study 1) or face difficult tradeoffs between product attributes and their values (Studies 2 and 3). Consequently, these consumers are not only more likely to buy extended warranties (Studies 3 and 4) but also willing to pay more for them (Studies 1 and 2). Additionally, it finds that choice-induced negative affect and the desire to avoid similar future decisions drive this effect (Studies 3 and 4). Research limitations/implications This research focuses on extended warranties for durable goods. Future studies could explore how choice difficulty influences consumer willingness to purchase insurance for temporary products or one-time events. Practical implications Retailers should weigh short-term warranty profits against potential brand reputation risks associated with exploiting choice complexity. Public policy makers should strengthen consumer protection through mandatory disclosures of product failure rates, implementing cooling-off periods, and regulating practices that intentionally increase choice difficulty. These findings emphasize the need for balanced approaches that protect consumer welfare while preserving legitimate warranty services. Originality/value This research offers significant implications for policy makers, businesses and consumers by emphasizing the role of decision-making processes in protecting consumers from irrational purchases.