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http://dx.doi.org/10.7840/kics.2016.41.2.229

Empirical Study on Unit Bias under the Flat Rate Pricing in the Korean Mobile Telecommunication Market  

Lee, Sang-Woo (Electronics and Telecommunications Research Institute)
Jeong, Seon-Hwa (Electronics and Telecommunications Research Institute)
Lee, Hyeongjik (Electronics and Telecommunications Research Institute)
Publication Information
The Journal of Korean Institute of Communications and Information Sciences / v.41, no.2, 2016 , pp. 229-237 More about this Journal
Abstract
The purpose of this paper is to empirically identify whether unit bias exists or not under the flat rate pricing in the Korean mobile telecommunication market and to give the desirable form of pricing plans for minimizing this irrational behaviors. Our results show that with the flat rate pricing consumers tends to make more voice or data traffic over their optimal consumption level, meaning the existence of unit bias in the Korean mobile market. These results imply that under the current pricing plans subscribers may pay higher monthly fee than their optimal cost which maximizes their utility, for using the telecommunications service. Thus, policy makers need to consider adopting mobile operators' segmentation of the flat rate pricing plans for the reduction of subscribers' telecommunications costs and the improvement of consumer welfare.
Keywords
Unit bias; Flat rate pricing; Mobile service; Cognitive bias; Optimal consumption;
Citations & Related Records
Times Cited By KSCI : 3  (Citation Analysis)
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