Flat rate bias

The term flat rate bias contains and addresses psychologically relevant aspects that induce consumers to conclude a flat rate contract despite cost disadvantages. This phenomenon occurs particularly frequently in the mobile telecommunications market and with Internet access.

Consumers with a flat rate bias choose a tariff that turns out to be too high for them in retrospect, meaning that they have to pay a higher invoice amount for the usage behavior shown than with billing systems that bill according to the units actually used.

Anja Lambrecht refers to studies from the USA in which it has been found that, for example, in the mobile telecommunications sector, 76 percent of consumers who have a flat rate would ultimately save money if they were in a more usage-dependent tariff and three percent of consumers, that are in a pay-per-use tariff that would save money in the flat rate. Similar results were found in the German market.

causes

The following psychological behaviors lead to this phenomenon:

• Insurance effect
  When consumers choose a flat rate, they can be sure that they have to pay the same invoice amount every month and that their invoice amount does not fluctuate every month.
• Taximeter effect
  This effect occurs in the same way with taxi rides: If you see the invoice amount running up on the taxi meter during the taxi ride, you may get restless and cannot relax during the taxi ride. If the taxi driver had offered you a flat rate for the trip from the start, then you would have paid before the trip and possibly enjoyed the taxi ride in a more relaxed manner. This is due to two things: you don't always see during use that it is becoming more and more expensive for you, and in the end you have decoupled the act of payment from the act of consumption. Many consumers enjoy the consumption of goods more if they are decoupled from the costs.
• Convenience effect
  The third reason is the convenience or convenience effect : You simply choose a tariff for convenience. Consumers like to choose a flat rate tariff, as the total costs are very easy to determine here, in contrast to multi-part and usage-dependent tariffs.
• Self-overestimation effect
  This means that some consumers simply overestimate the amount they use, e.g. B. due to high usage differences within different billing periods, due to changing preferences in use or the ability to self-control and self-discipline.

literature

• Sven Heidenreich, Frank Huber, Johannes Vogel: Flat rates and the fascination of limitless consumption. An empirical study in the wireless industry . Wiesbaden 2008, ISBN 978-3-8349-1093-6 .

Individual evidence

1. ↑ wiwi.uni-frankfurt.de (PDF; 306 kB) accessed October 28, 2010