10.17889/E108994
Osborne, Matthew
Grubb, Michael D.
Replication data for: Cellular Service Demand: Biased Beliefs, Learning, and Bill Shock
ICPSR Inter-university Consortium for Political and Social Research
2015
10.1257/aer.20120283
10.1257/aer.20120283
V0
Following FCC pressure to end bill shock, cellular carriers now alert customers when they exceed usage allowances. We estimate a model of plan choice, usage, and learning using a 2002-2004 panel of cellular bills. Accounting for firm price adjustment, we predict that implementing alerts in 2002-2004 would have lowered average annual consumer welfare by $33. We show that consumers are inattentive to past usage, meaning that bill-shock alerts are informative. Additionally, our estimates imply that consumers are overconfident, underestimating the variance of future calling. Overconfidence costs consumers $76 annually at 2002-2004 prices. Absent overconfidence, alerts would have little to no effect. (JEL D12, D18, L11, L96, L98)