Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock
Recent research highlights the importance of biased expectations and inattention for nonlinear pricing in dynamic environments. Findings are: (1) Three-part tariffs, such as cellular service contracts, exploit consumer overconfidence. (2) Surprise penalty fees may be used to further exploit biased b...
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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Elsevier
2015
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| Online Access: | http://hdl.handle.net/1721.1/99174 |
| _version_ | 1826195300246618112 |
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| author | Grubb, Michael D. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Grubb, Michael D. |
| author_sort | Grubb, Michael D. |
| collection | MIT |
| description | Recent research highlights the importance of biased expectations and inattention for nonlinear pricing in dynamic environments. Findings are: (1) Three-part tariffs, such as cellular service contracts, exploit consumer overconfidence. (2) Surprise penalty fees may be used to further exploit biased beliefs or alternatively to price discriminate more efficiently whenever consumers are inattentive. (3) Implementing the recent bill-shock agreement between cellular carriers and the FCC is predicted to harm rather than help consumers when endogenous price changes are taken into account. |
| first_indexed | 2024-09-23T10:10:32Z |
| format | Article |
| id | mit-1721.1/99174 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T10:10:32Z |
| publishDate | 2015 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | mit-1721.1/991742022-09-30T19:23:45Z Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock Grubb, Michael D. Sloan School of Management Grubb, Michael D. Recent research highlights the importance of biased expectations and inattention for nonlinear pricing in dynamic environments. Findings are: (1) Three-part tariffs, such as cellular service contracts, exploit consumer overconfidence. (2) Surprise penalty fees may be used to further exploit biased beliefs or alternatively to price discriminate more efficiently whenever consumers are inattentive. (3) Implementing the recent bill-shock agreement between cellular carriers and the FCC is predicted to harm rather than help consumers when endogenous price changes are taken into account. 2015-10-07T14:42:30Z 2015-10-07T14:42:30Z 2012-01 Article http://purl.org/eprint/type/JournalArticle 01677187 http://hdl.handle.net/1721.1/99174 Grubb, Michael D. “Dynamic Nonlinear Pricing: Biased Expectations, Inattention, and Bill Shock.” International Journal of Industrial Organization 30, no. 3 (May 2012): 287–290. en_US http://dx.doi.org/10.1016/j.ijindorg.2011.12.007 International Journal of Industrial Organization Creative Commons Attribution-Noncommercial-NoDerivatives http://creativecommons.org/licenses/by-nc-nd/4.0/ application/pdf Elsevier MIT Web Domain |
| spellingShingle | Grubb, Michael D. Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock |
| title | Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock |
| title_full | Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock |
| title_fullStr | Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock |
| title_full_unstemmed | Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock |
| title_short | Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock |
| title_sort | dynamic nonlinear pricing biased expectations inattention and bill shock |
| url | http://hdl.handle.net/1721.1/99174 |
| work_keys_str_mv | AT grubbmichaeld dynamicnonlinearpricingbiasedexpectationsinattentionandbillshock |