Dynamic nonlinear pricing: Biased expectations, inattention, and bill shock

Michael Grubb

International Journal of Industrial Organization, 2012, vol. 30, issue 3, 287-290

Abstract: 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.

Keywords: Nonlinear pricing; Dynamic; Inattention; Overconfidence; Bill shock; Cellular (search for similar items in EconPapers)
JEL-codes: D18 D4 D8 L1 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:3:p:287-290

DOI: 10.1016/j.ijindorg.2011.12.007

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