Purchasing digital goods such as mobile apps is risky for consumers. As experience good, apps need to be installed to see if they meet requirements. To foster app sales, platform operators reduce inherent information asymmetry by providing information like customer reviews and download numbers. Lenient refund policies are another way to reduce consumer risk. Previous research has not yet evaluated whether refund policies are effective for paid mobile app adop-tion. This article investigates whether refund policies play a role in purchase decisions and how they should be designed by store owners or app developers to foster app sales. A large-scale natural experiment based on a change of refund policy of a well-known mobile app platform, followed by a conjoint experiment that evaluates existing refund policy designs is conducted. Other decision factors such as ratings are also considered. Both analyses show that refund poli-cies play a critical part in the customers' decision process. We find that users prefer a smooth refund process over a longer period to apply for refunding and that lenient refund policies have a positive effect on paid app sales. Results indicate that app users rely on lenient refund policies as much as on customer reviews.
Zhou, Wenyan; Waltenrath, Adrian; and Hinz, Oliver, (2019). "THE ROLE OF REFUND POLICIES IN MOBILE APP PURCHASE DECISIONS". In Proceedings of the 27th European Conference on Information Systems (ECIS), Stockholm & Uppsala, Sweden, June 8-14, 2019. ISBN 978-1-7336325-0-8 Research Papers.