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Abstract:

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CentrePiece Article
What makes consumers switch mobile phone tariffs?
Christos Genakos, Costas Roumanias and Tommaso Valletti
February 2016
Paper No' CEPCP465:
Full Paper (pdf)

CentrePiece 20 (3) Winter 2015/2016


JEL Classification: D03; D12; D81; L96


Tags: loss aversion; consumer switching; tariff plans; risk aversion; mobile telephony

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.

This article summarises ‘Loss Aversion on the Phone’ by Christos Genakos, Costas Roumanias and Tommaso Valletti,CEP Discussion Paper No.1373, September 2015.