FREAK-Shot: Christmas Ornament Edition

Reader Tim Kelly sends in photo from a store in Lombard, Illinois:

As Tim writes:

I spotted an interesting sign while out Christmas shopping the other day.  The sign stated the company’s “breakage policy,” where any broken item must be bought, but that the store will only charge half price on the broken item.  The sign continued offered to repair the broken item, free of charge (I confirmed the free repairs from the shop owner, as it is not explicitly stated in the sign).

The sign was located on a mall kiosk selling Christmas ornaments.  I imagine breakage is a big issue for such a shop, as their product is relatively fragile and are highly enticing to bored kids stuck Christmas shopping with their parents.

My initial instinct upon seeing the sign was that this policy seemed to be inviting people to game the system.  A person could easily damage an ornament slightly in such a way that wouldn’t be highly visible on the tree, “apologize” emphatically to the shop owner, and walk away with a half priced item. This method is especially enticing given the free repairs offered.Ultimately, I imagine the good will garnered from the reasonable breakage policy leads to a lot less “break and run” situations where the store recovers nothing for the broken item, and the store ultimately is better off.  This would be especially true if the store still turns a profit on the half-priced items, which is likely.  I’m interested to hear what you and the Freakonomics community have to say on the topic.

What do you think, readers?