IDEAS home Printed from https://ideas.repec.org/p/zbw/itse16/148693.html
   My bibliography  Save this paper

Are consumers myopic? Evidence from handset and mobile services choices

Author

Listed:
  • Nicolle, Ambre

Abstract

This paper estimates a discrete choice model for combination of mobile tariffs and handsets using a crosssection of 11,000 new customers from a European telecommunications carrier. It mainly focuses on the valuation of tariff price, handset subsidy and price of the handset. On the one hand, a significant evolution is observed over time. Indeed, important changes on the supply side are observed, mainly in the mobile service market but also in the retailing market. On the other hand, age of consumers also influences in a wide extent consumers valuation of services and handset. Accounting for this heterogeneity, the model enables to estimate a measure for myopia occurring when consumers are trading-off price of the tariff and upfront cost of the handset. If evidence of myopia is shown for the whole time period considered (Q4 of 2011- Q4 of 2014), its magnitude tends to decrease significantly since the end of 2012. This effect is mainly due to the take-off of sim-only contracts, emergence of cheaper handsets and improved quality of information provided to consumers.

Suggested Citation

  • Nicolle, Ambre, 2016. "Are consumers myopic? Evidence from handset and mobile services choices," 27th European Regional ITS Conference, Cambridge (UK) 2016 148693, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itse16:148693
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/148693/1/Nicolle.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    2. Pereira, Pedro & Ribeiro, Tiago, 2011. "The impact on broadband access to the Internet of the dual ownership of telephone and cable networks," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 283-293, March.
    3. Kenneth E. Train & Daniel L. McFadden & Moshe Ben-Akiva, 1987. "The Demand for Local Telephone Service: A Fully Discrete Model of Residential Calling Patterns and Service Choices," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 109-123, Spring.
    4. Xavier Gabaix & David Laibson, 2018. "Shrouded attributes, consumer myopia and information suppression in competitive markets," Chapters, in: Victor J. Tremblay & Elizabeth Schroeder & Carol Horton Tremblay (ed.), Handbook of Behavioral Industrial Organization, chapter 3, pages 40-74, Edward Elgar Publishing.
    5. Choi, Seon-Kyou & Lee, Myeong-Ho & Chung, Gyu-Hwa, 2001. "Competition in Korean mobile telecommunications market: business strategy and regulatory environment," Telecommunications Policy, Elsevier, vol. 25(1-2), pages 125-138, February.
    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, January.
    7. Gregory Rosston & Scott Savage & Donald Waldman, 2010. "Household Demand for Broadband Internet Service," Discussion Papers 09-008, Stanford Institute for Economic Policy Research, revised Feb 2010.
    8. Verboven, Frank & Grigolon, Laura & Reynaert, Mathias, 2014. "Consumer valuation of fuel costs and the effectiveness of tax policy: Evidence from the European car market," CEPR Discussion Papers 10301, C.E.P.R. Discussion Papers.
    9. Hunt Allcott & Nathan Wozny, 2014. "Gasoline Prices, Fuel Economy, and the Energy Paradox," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 779-795, December.
    10. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    11. Oecd, 2013. "Mobile Handset Acquisition Models," OECD Digital Economy Papers 224, OECD Publishing.
    12. R. H. Strotz, 1955. "Myopia and Inconsistency in Dynamic Utility Maximization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(3), pages 165-180.
    13. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2013. "Are Consumers Myopic? Evidence from New and Used Car Purchases," American Economic Review, American Economic Association, vol. 103(1), pages 220-256, February.
    14. Grzybowski, Lukasz & Liang, Julienne, 2015. "Estimating demand for fixed-mobile bundles and switching costs between tariffs," Information Economics and Policy, Elsevier, vol. 33(C), pages 1-10.
    15. Song, Jae-Do & Kim, Jae-Cheol, 2001. "Is five too many? Simulation analysis of profitability and cost structure in the Korean mobile telephone industry," Telecommunications Policy, Elsevier, vol. 25(1-2), pages 101-123, February.
    16. Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, vol. 93(1), pages 297-310, March.
    17. Rosston Gregory L. & Savage Scott J & Waldman Donald M, 2010. "Household Demand for Broadband Internet in 2010," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-45, September.
    18. Dreyfus, Mark K & Viscusi, W Kip, 1995. "Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 79-105, April.
    19. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    20. Lukasz Grzybowski, 2008. "Estimating Switching Costs in Mobile Telephony in the UK," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 113-132, June.
    21. Jiyoung Kim, 2006. "A Structural Analysis for Consumer's Dynamic Switching Decision in the Cellular Service Industry," Working Papers 06-24, NET Institute, revised Oct 2006.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Allcott, Hunt & Mullainathan, Sendhil & Taubinsky, Dmitry, 2014. "Energy policy with externalities and internalities," Journal of Public Economics, Elsevier, vol. 112(C), pages 72-88.
    2. Sallee, James M. & West, Sarah E. & Fan, Wei, 2016. "Do consumers recognize the value of fuel economy? Evidence from used car prices and gasoline price fluctuations," Journal of Public Economics, Elsevier, vol. 135(C), pages 61-73.
    3. Grzybowski, Lukasz & Liang, Julienne, 2014. "Estimating demand for quadruple-play tariffs: The impact on consumer surplus," 25th European Regional ITS Conference, Brussels 2014 101375, International Telecommunications Society (ITS).
    4. Hunt Allcott & Christopher Knittel, 2019. "Are Consumers Poorly Informed about Fuel Economy? Evidence from Two Experiments," American Economic Journal: Economic Policy, American Economic Association, vol. 11(1), pages 1-37, February.
    5. Houde, Sébastien & Myers, Erica, 2021. "Are consumers attentive to local energy costs? Evidence from the appliance market," Journal of Public Economics, Elsevier, vol. 201(C).
    6. Daziano, Ricardo A., 2015. "Inference on mode preferences, vehicle purchases, and the energy paradox using a Bayesian structural choice model," Transportation Research Part B: Methodological, Elsevier, vol. 76(C), pages 1-26.
    7. Hunt Allcott & Nathan Wozny, 2014. "Gasoline Prices, Fuel Economy, and the Energy Paradox," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 779-795, December.
    8. Xavier Gabaix, 2017. "Behavioral Inattention," NBER Working Papers 24096, National Bureau of Economic Research, Inc.
    9. Hunt Allcott, 2014. "Paternalism and Energy Efficiency: An Overview," NBER Working Papers 20363, National Bureau of Economic Research, Inc.
    10. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    11. Grzybowski, Lukasz & Hasbi, Maude & Liang, Julienne, 2018. "Transition from copper to fiber broadband: The role of connection speed and switching costs," Information Economics and Policy, Elsevier, vol. 42(C), pages 1-10.
    12. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    13. Griffin, Míde & Lyons, Sean & Mohan, Gretta & Joseph, Merin & Domhnaill, Ciarán Mac & Evans, John, 2022. "Intra-operator mobile plan switching: Evidence from linked survey and billing microdata," Telecommunications Policy, Elsevier, vol. 46(7).
    14. Huse, Cristian & Lucinda, Claudio & Cardoso, Andre Ribeiro, 2020. "Consumer response to energy label policies: Evidence from the Brazilian energy label program," Energy Policy, Elsevier, vol. 138(C).
    15. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    16. Mathias Reynaert & James M. Sallee, 2016. "Corrective Policy and Goodhart's Law: The Case of Carbon Emissions from Automobiles," NBER Working Papers 22911, National Bureau of Economic Research, Inc.
    17. Jacobsen, Grant D., 2015. "Do energy prices influence investment in energy efficiency? Evidence from energy star appliances," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 94-106.
    18. Pavan, Giulia, 2017. "Green Car Adoption and the Supply of Alternative Fuels," TSE Working Papers 17-875, Toulouse School of Economics (TSE).
    19. Leard, Benjamin, 2018. "Consumer inattention and the demand for vehicle fuel cost savings," Journal of choice modelling, Elsevier, vol. 29(C), pages 1-16.

    More about this item

    Keywords

    Handset subsidy; Consumer myopia; Heterogeneous preferences;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:itse16:148693. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: http://www.itseurope.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.