Seminar – Are Consumers Myopic? Evidence from Handset and Mobile Services Choices

Dr Ambre Nicolle, Postdoctoral Researcher, University of Munich

In this paper, I estimate discrete choice models for handsets and mobile tariffs using a sample of 10,740 subscribers of a European mobile telecommunications operator, observed between April 2011 and December 2014. The estimates are used to measure consumer myopia, i.e. how they trade off current and future expenses when making their choices. I highlight differences across groups of consumers and, more importantly, over time. Indeed, I document a significant decrease in consumer myopia over the period I study and show that this value seems to stabilise around a value close to what has been estimated in other markets. I argue that important changes in the market structure are the driving forces behind the decline of myopia, impacting prices and variety of tariffs available, as well as consumers’ awareness. I also argue that this situation benefited all consumers, not only those who selected a SIM only tariff. Finally, I estimate a series of counterfactuals to assess the gain in consumer welfare that resulted from the changes observed in this market. For example, I show that the introduction of SIM only tariffs increased the average consumer’s surplus by over €23.

Speaker bio

Ambre Nicolle is currently a postdoctoral researcher at the University of Munich, where she was awarded a fellowship co funded by a Marie Skłodowska-Curie grant for her project “Consumer Behaviour in Markets with Complex Pricing Strategies”. She received a PhD in economics from the University of Montpellier, France, in 2018. Her research primarily focuses on the demand and supply sides in network industries, particularly the mobile telecommunications. She uses structural approach and observational data to model consumer behaviour and perform counterfactuals. She also uses various reduced form approaches to comment on the development of prices and variety of products in markets subjects to an evolving competitive, regulatory and technological environment.