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Measuring the cost of making payment decisions

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  • Shy, Oz

Abstract

This short paper proposes a simple method of calibrating for the non-monetary costs associated with using different payment plans. These non-monetary costs often lead consumers to choose a flat-rate subscription plan rather than paying separately for each unit of consumption, despite the fact that the pay-per-use plan turns out to be cheaper ex post. The calibration results hint that these costs are relatively higher for "inexpensive" services than for "expensive" services.

Suggested Citation

  • Shy, Oz, 2008. "Measuring the cost of making payment decisions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2411-2416, December.
    • Handle: RePEc:eee:soceco:v:37:y:2008:i:6:p:2411-2416
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    References listed on IDEAS

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