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What makes consumers switch mobile phone tariffs?

Author

Listed:
  • Christos Genakos
  • Costas Roumanias
  • Tommaso Valletti

Abstract

The potential psychological pain of nasty surprises on mobile phone bills is a great motivator to switch tariffs, according to research by Christos Genakos and colleagues. Their study notes that navigating through thousands of tariff plans for mobile phones to find the best one is not easy in today's telecoms market - and having an 'expert friend' calculate the contract with the biggest savings definitely helps. But the findings suggest that regulators cannot rely on price comparison sites to discipline the market since savings are not necessarily the first thing even well informed consumers are looking for. Rather, it is their desire to avoid psychological losses.

Suggested Citation

  • Christos Genakos & Costas Roumanias & Tommaso Valletti, 2016. "What makes consumers switch mobile phone tariffs?," CentrePiece - The magazine for economic performance 465, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepcnp:465
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    File URL: https://cep.lse.ac.uk/pubs/download/cp465.pdf
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    More about this item

    Keywords

    loss aversion; consumer switching; tariff plans; risk aversion; mobile telephony;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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