Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/60376 
Year of Publication: 
2012
Series/Report no.: 
23rd European Regional Conference of the International Telecommunications Society (ITS), Vienna, Austria, 1st-4th July, 2012
Publisher: 
International Telecommunications Society (ITS), Calgary
Abstract: 
This paper investigates why consumers choose calling plans that are not always cost-minimizing. Our approach is twofold: we account for general difficultiesfacing a tariff choice, as well as for biased preferences. We provide evidence froman experiment among German university students and staff, finding that participants are often not aware of their actual consumption. In line with the findings on at-rate biases, respondents systematically overestimate their consumption. On the other hand, they are generally able and willing to detect optimal tariffs. Furthermore, with increasing usage level, consumers' performance improves. However, some participants hold preferences for certain tariff forms, seducing them to choose cost-dominated offers. In our setup, we find that respondents prefer tariffs involving subsidies or hire-purchase options for handsets over contracts with buy now options.
Subjects: 
Behavioral Economics
Mobile phone tariffs
Handset subsidy
Hirepurchase of device
Document Type: 
Conference Paper

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