Multipart tariffs and bounded rationality: an experimental analysis of mobile phone plan choices

Friesen, Lana and Earl, Peter E. (2015) Multipart tariffs and bounded rationality: an experimental analysis of mobile phone plan choices. Journal of Economic Behavior & Organization, 116 239-253. doi:10.1016/j.jebo.2015.04.016

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Author Friesen, Lana
Earl, Peter E.
Title Multipart tariffs and bounded rationality: an experimental analysis of mobile phone plan choices
Journal name Journal of Economic Behavior & Organization   Check publisher's open access policy
ISSN 0167-2681
Publication date 2015-08-01
Year available 2015
Sub-type Article (original research)
DOI 10.1016/j.jebo.2015.04.016
Open Access Status File (Author Post-print)
Volume 116
Start page 239
End page 253
Total pages 15
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Subject 2002 Economics and Econometrics
1407 Organizational Behavior and Human Resource Management
Abstract Multipart tariff structures add to the computational challenges in choosing mobile phone connection services. We study the quality of decision making in a laboratory environment where consumers only face a small set of mobile phone plan options but have to contend with different degrees of tariff complexity as well as uncertain usage. Our main finding is that simply eliminating the multipart tariff structure does not necessarily lead to better decisions. Rather it is multipart tariffs with included values in excess of monthly fees, thus entailing two-tier pricing structures with increasing marginal costs, which lead to the worst decisions. Knowledgeable participants, who understand mobile phone plan pricing, make significantly better choices.
Keyword Complexity
Laboratory experiments
Mobile phone pricing
Nonlinear pricing
Cellular
Q-Index Code C1
Q-Index Status Confirmed Code
Grant ID DP1093840
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2016 Collection
School of Economics Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 2 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 2 times in Scopus Article | Citations
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Created: Wed, 27 May 2015, 01:35:32 EST by Tammy Crealy on behalf of School of Economics