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• W2113647358 abstract "By April 2013, the FCC's recent bill-shock agreement with cellular carriers requires consumers be notified when exceeding usage allowances. Will the agreement help or hurt consumers? To answer this question, we estimate a model of consumer plan choice, usage, and learning using a panel of cellular bills. Our model predicts that the agreement will lower average consumer welfare by $2 per year because firms will respond by raising monthly fees. Our approach is based on novel evidence that consumers are inattentive to past usage (meaning that bill-shock alerts are informative) and advances structural modeling of demand in situations where multipart tariffs induce marginal-price uncertainty. Additionally, our model estimates show that an average consumer underestimates both the mean and variance of future calling. These biases cost consumers $42 per year at existing prices. Moreover, absent bias, the bill-shock agreement would have little to no effect." @default.
• W2113647358 created "2016-06-24" @default.
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• W2113647358 date "2012-01-01" @default.
• W2113647358 modified "2023-10-16" @default.
• W2113647358 title "Cellular Service Demand: Biased Beliefs, Learning, and Bill Shock" @default.
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• W2113647358 doi "https://doi.org/10.2139/ssrn.1986276" @default.
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