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A major goal of the 1975 Magnuson-Moss Warranty-Federal Trade Commission Improvement Act was to create a market place in which a product's warranty would be an accurate signal of its reliability. Appliances and motor vehicles were studied empirically to determine whether warranties actually do serve as reliability signals. The results of the study show that even after controlling for other cues, warranties are accurate signals.
Joshua L. Wiener (Sun,) studied this question.
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