Dear all,
Please join us for the first session of the Applied Statistics Workshop
(Gov 3009) this Wednesday, Sept. 5 from 12.00 - 1.30 pm in CGIS Knafel Room
354. Michael Grubb <http://www.mit.edu/~mgrubb/>, an Assistant Professor of
Applied Economics from the MIT Sloan School of Management will give a
presentation entitled "Cellular Service Demand: Biased Beliefs, Learning,
and Bill Shock <http://www.mit.edu/~mgrubb/GrubbOsborne.pdf>". As always, a
light lunch will be provided.
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 multi-part
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.
Note that this work is joint with Matthew Osborne at the Bureau of Economic
Analysis.
An up-to-date schedule for the workshop is available at
http://www.iq.harvard.edu/events/node/1208.
Best,
Konstantin
--
Konstantin Kashin
Ph.D. Candidate in Government
Harvard University
Mobile: 978-844-0538
E-mail: kkashin(a)fas.harvard.edu
Site:
http://www.konstantinkashin.com/<http://people.fas.harvard.edu/%7Ekkashi…