[gov3009-l] Applied Statistics Workshop: Michael Grubb on Wed., Sept. 5

Konstantin Kashin kkashin at fas.harvard.edu
Mon Sep 3 15:15:15 EDT 2012

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.


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

An up-to-date schedule for the workshop is available at


Konstantin Kashin
Ph.D. Candidate in Government
Harvard University

Mobile: 978-844-0538
E-mail: kkashin at fas.harvard.edu
Site: http://www.konstantinkashin.com/<http://people.fas.harvard.edu/%7Ekkashin/>
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