Final answer:
Consumers are more likely to purchase a car from a dealership that has a trustworthy reputation. Cheaper used cars may come with more risk due to the lack of reputation and potential undisclosed problems. Consumers need to balance their appetite for risk with potential issues.
Step-by-step explanation:
When comparison shopping at competing automobile dealerships, consumers are more likely to purchase a car from a dealership that has a trustworthy reputation. Dealerships with a trustworthy reputation try to fix problems that may not be obvious to their customers, which creates good word of mouth about their vehicles' long term reliability. These dealerships are more likely to maintain a strong reputation and long-term profitability, so consumers feel more confident in purchasing a car from them.
On the other hand, cheaper used cars can be found on less well-established lots or on platforms like Craigslist, where individual sellers have no reputation to defend. While these cars may have lower prices, they also come with more risk due to the lack of reputation and potentially undisclosed problems. Therefore, consumers need to balance their appetite for risk with the potential headaches of unanticipated trips to the repair shop.