Scott's Painting Company paints houses. Since Scott's business does not have the name recognition of some of the bigger painting companies, Scott advertises a "Five-Year Money Back Guarantee" to indicate to buyers that his service is of high quality. This guarantee is an example of
A)screening.
B)signaling.
C)the seller's curse.
D)the principal-agent problem.

Question

Quizplus · Accepted Answer

The "Five-Year Money Back Guarantee" is a signaling mechanism used by Scott's Painting Company to indicate high quality service to potential buyers.

Scott's Painting Company Paints Houses