Cognitive Bias In Network Services

The assumption of rationality is fundamental to large part of network economics literature. In this paper, we use a simple definition of rationality based on economic self-interest and test for such behavior using real data on how users purchase and consume mobile network services. If users acted in their best (optimal) interest, then they would opt for the tariff that best suits their demands. However, that need not be the case, as users can fall prey to biases that can lead them to make seemingly sub-optimal choices. Such biases are hard to characterize and in this paper we empirically study how end-users purchase and use network services.We find that most customers choose sub-optimal tariffs, and that median and mean overpayment is 26% and 37%, respectively, of the user optimal tariff bill. Additionally, we observe not only that perception of traffic usage biases the tariff choice but also that the choice of tariff biases traffic usage: the traffic demand grows substantially when users switch from pay-as-you-go to a bundle tariff, and that traffic demand on a bundle is not uniformly spread across time.