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Inattentive consumers in markets for services

Lookup NU author(s): Professor Daniel ZizzoORCiD

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This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).

Abstract

In an experiment on markets for services, we find that consumers are likely to stick to default tariffs and achieve suboptimal outcomes. We find that inattention to the task of choosing a better tariff is likely to be a substantial problem in addition to any task and tariff complexity effect. The institutional setup on which we primarily model our experiment is the UK electricity and gas markets, and our conclusion is that the new measures by the UK regulator Ofgem to improve consumer outcomes are likely to be of limited impact.

Publication metadata

Author(s): Sitzia S, Zheng J, Zizzo DJ

Publication type: Article

Publication status: Published

Journal: Theory and Decision

Year: 2015

Volume: 79

Issue: 2

Pages: 307-332

Print publication date: 01/09/2015

Online publication date: 12/09/2014

Acceptance date: 28/07/2014

Date deposited: 04/10/2014

ISSN (print): 0040-5833

ISSN (electronic): 1573-7187

Publisher: Springer

URL: http://dx.doi.org/10.1007/s11238-014-9466-8

DOI: 10.1007/s11238-014-9466-8

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