A Behavioral Economic Interpretation of the Preference for Flat Rates: The Case of Post-paid Mobile Phone Services

Hitoshi Mitomo (), Tokio Otsuka and Kiminori Nakaba
Additional contact information
Hitoshi Mitomo: Waseda University
Tokio Otsuka: Waseda University
Kiminori Nakaba: Waseda University

A chapter in Telecommunication Markets, 2009, pp 59-73 from Springer

Abstract: Abstract This paper aims to empirically test the existence of a biased preference for flat rate service plans related to mobile phones, and to examine how psychological factors can affect such preferences. We define such preference as “flat-rate preference”and interpret it in terms of behavioral economic concepts. Behavioral economics, in spite of its limitations in empirical analysis, provides deeper insights into human behavior than traditional economic models since it considers psychological factors within decision-making processes and allows for irrational choices by consumers. By applying several important concepts from behavioral economics, we seek to investigate a more reasonable explanation for mobile users’ flat-rate preference. Loss aversion, reference dependence, the shape of probability weighting function, mental accounting, ambiguity aversion and cognitive dissonance are employed to examine such preference. Non-parametric methods are applied in the empirical analysis to data that was collected through an online survey in Japan. We successfully show the existence of the flat-rate preference in terms of loss aversion and reference dependence although we failed to identify the influences of the shape of the probability weighting function. The other three concepts could also be recognized as factors conducive to preference behaviors.

Keywords: Switching Cost; Prospect Theory; Loss Aversion; Cognitive Dissonance; Behavioral Economic (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (4)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-7908-2082-9_4

Ordering information: This item can be ordered from
http://www.springer.com/9783790820829

DOI: 10.1007/978-3-7908-2082-9_4

Access Statistics for this chapter

More chapters in Contributions to Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().