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Telecommunications Consumers: A Behavioural Economic Analysis

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  • Lunn, Pete

Abstract

This paper argues that telecommunications markets present the consumer with a decision-making environment that is particularly likely to be prone to established biases in consumer decision-making. The analysis identifies four properties of telecommunications markets, which in combination are probably unique and which may make the sector prey to biases identified by behavioural economics. The analysis offers a range of known behavioural phenomena that, first, may help to explain the generally low levels of switching between telecommunications providers and, second, could result in failure to select optimum contracts, because of inaccurate expectations of usage or time inconsistent preferences. While more research is required to assess the merit of these hypotheses, they raise the possibility that telecommunications markets may be inefficient and prone to less effective competition than many other consumer markets. Potential policy responses are also discussed.
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Suggested Citation

  • Lunn, Pete, 2013. "Telecommunications Consumers: A Behavioural Economic Analysis," Papers RB2012/4/3, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:rb2012/4/3
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    Cited by:

    1. Uner, M.Mithat & Guven, Faruk & Cavusgil, S.Tamer, 2020. "Churn and loyalty behavior of Turkish digital natives: Empirical insights and managerial implications," Telecommunications Policy, Elsevier, vol. 44(4).
    2. McGowan, Féidhlim, 2018. "The roaming regulation and the case for applying behavioural industrial organisation to EU competition policy," Papers WP598, Economic and Social Research Institute (ESRI).
    3. Fischer-Thöne, Christian & Rasch, Alexander & Wenzel, Tobias, 2025. "Complex pricing and consumer-side attention," International Journal of Industrial Organization, Elsevier, vol. 99(C).
    4. C. Bisping & T. J. Dodsworth, 2019. "Consumer Protection and the Regulation of Mobile Phone Contracts: A Study of Automatically Renewable Long-Term Contracts Across Jurisdictions," Journal of Consumer Policy, Springer, vol. 42(3), pages 349-375, September.
    5. Dempsey, Seraphim & Mahon, Ben, 2025. "Into a brick wall: mobile connectivity and the thermal efficiency of residential buildings," 33rd European Regional ITS Conference, Edinburgh, 2025: Digital innovation and transformation in uncertain times 331265, International Telecommunications Society (ITS).
    6. 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).
    7. Mwakatumbula, Hilda J. & Moshi, GoodielC. & Mitomo, Hitoshi, 2015. "Consumer Awareness And Protection In Telecommunication Markets: Case Of Tanzania; Determinant Of Consumers’ Knowledge On Their Rights," 26th European Regional ITS Conference, Madrid 2015 127161, International Telecommunications Society (ITS).
    8. Calzada, Joan & García-Mariñoso, Begoña & Suárez, David, 2023. "Do telecommunications prices depend on consumer engagement?," Information Economics and Policy, Elsevier, vol. 62(C).
    9. Peter Lunn, 2015. "Are Consumer Decision-Making Phenomena a Fourth Market Failure?," Journal of Consumer Policy, Springer, vol. 38(3), pages 315-330, September.
    10. Peter D., Lunn & Sean, Lyons, 2017. "Consumer switching intentions for telecoms services: evidence from Ireland," MPRA Paper 77412, University Library of Munich, Germany.
    11. Earl, Peter E. & Friesen, Lana & Shadforth, Christopher, 2019. "Elusive optima: A process tracing analysis of procedural rationality in mobile phone connection plan choices," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 303-322.
    12. Capponi, Giovanna & Corrocher, Nicoletta & Zirulia, Lorenzo, 2021. "Personalized pricing for customer retention: Theory and evidence from mobile communication," Telecommunications Policy, Elsevier, vol. 45(1).
    13. Barsha Saha & Miguel Martínez-García & Sharad Nath Bhattacharya & Rohit Joshi, 2022. "Overcoming Choice Inertia through Social Interaction—An Agent-Based Study of Mobile Subscription Decision," Games, MDPI, vol. 13(3), pages 1-16, June.
    14. Khemakongkanonth, Chate, 2025. "An empirical analysis on relationships between over-the-top applications for communication and traditional mobile voice services," Telecommunications Policy, Elsevier, vol. 49(3).
    15. Xue, Lian & Sitzia, Stefania & Turocy, Theodore L., 2017. "Mathematics self-confidence and the “prepayment effect” in riskless choices," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 239-250.
    16. García-Mariñoso, Begoña & Suárez, David, 2019. "Switching mobile operators: Evidence about consumers’ behavior from a longitudinal survey," Telecommunications Policy, Elsevier, vol. 43(5), pages 426-433.
    17. Stefania Sitzia & Jiwei Zheng & Daniel John Zizzo, 2012. "Complexity and Smart Nudges with Inattentive Consumers," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2012-13, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    18. Carthy, Philip & Lunn, Pete & Lyons, Sean, 2018. "Demographic variation in active consumer behaviour: Who searches most for retail broadband services?," MPRA Paper 90366, University Library of Munich, Germany.
    19. Roxani Polimerou & George Spais, 2025. "Εstablishing relationships between brands and customers via strategic social media chatbots for telecom goods and services," Journal of Marketing Analytics, Palgrave Macmillan, vol. 13(2), pages 328-370, June.
    20. Stefania Sitzia & Jiwei Zheng & Daniel Zizzo, 2015. "Inattentive consumers in markets for services," Theory and Decision, Springer, vol. 79(2), pages 307-332, September.

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