The Irrational Consumer by Trevisan Enrico;

Author:Trevisan, Enrico; [Trevisan, Enrico]
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2016-08-15T00:00:00+00:00

6.2 Paying and Securing

The separation of payment from usage can also generate a kind of insurance effect. This might include for example not ruining a pleasant telephone conversation by associating it directly with the cost of the call. I believe this represents one of the real reasons which lead many telephone customers to choose a flat-rate deal, even when paying per call would be cheaper. For a person using the phone, not having to think about meter ticking or the minutes passing can in fact generate value and consequently a greater willingness to spend. Naturally, here too the point made in earlier chapters will apply, regarding the phenomenon of self-selection among users opting for certain pricing models. In many cases consumers who know that they make frequent use of the telephone will be oriented towards a flat-rate tariff as a result. A clear causal relationship between the two cannot necessarily be established, however. Many consumers choose flat-rate deals so as not to have to think any longer about telephone costs. This security takes on a value in itself, and in turn influences the frequency and duration of calls.

Figure 6.1 The separation effect: can I relax? The insurance effect plays a further role, which is to align the interests of the payer with those of the consumer. I remember when my sister and I were both teenagers, beginning to discover the vital importance of spending at least two hours a day on the phone with our friends to exchange real-time updates on the latest TV series, to give and receive help with homework assignments, or just to say that we would be in touch later by phone (the so-called ‘second level’ calls!). In that period my father was literally terrified when the time came to open the telephone bill. I am certain that he would have willingly paid a flat-rate premium in order to be certain in advance that the costs of his children’s communicative frenzy could go beyond a certain limit (Fig. 6.2).

Figure 6.2 The separation effect: can I remember how much I spent?

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