While product proliferation is often thought of as benefitting consumers by providing more and diverse options for purchase, behavioural economics suggests that consumers can suffer from choice overload. There is empirical evidence that when consumers have to compare and choose between many complex options they often make mistakes, or even fail to take decisions at all. The problem of customer confusion when purchasing mobile telecommunications services is widely acknowledged, and is gaining increasing attention from regulators.
It has been asserted that well-chosen heuristics can provide fast, close-to-optimal results in a situation where time, information, or cognitive abilities are limited, but they can also lead to errors. The aim of this thesis is to develop a program capable of simulating the search and decision-making process under different decision rules for consumers choosing mobile telecommunication services, and to use this program to assess the performance of a series of decision rules and search techniques.
In this thesis, a model and program will be developed for simulating the use, and assessing the performance, of non-compensatory lexicographic sequential elimination decision rules. First, consumers will be sorted into user types by performing cluster analysis on usage data of Australian mobile phone users, and generic user profiles will be developed. A program will be written to simulate consumers conducting a search. A second program will be written to simulate consumers following a series of decision rules. The usage information and generic profiles will be run through both programs over a series of iterations, and the results will be analysed using Stata.