Many people never switch telecoms provider; what is different about switchers? ESRI Research Bulletin 2018/7

Many consumers have never switched telecoms company, despite the efforts of regulators to encourage shopping around and to make switching easier. A significant number of consumers need to be willing to compare offers and to consider switching to better ones if the benefits of competition are going to be spread more widely. In particular, if there are identifiable groups of consumers who are unlikely to consider switching, they may end up with worse deals than other consumers. This research investigated which consumers are more inclined to switch providers of broadband, mobile phone and landline services. It looked not only at individual characteristics like age, family structure and income, but also at characteristics of the service and how it is used, such as whether it is ‘bundled’ or whether people in the household use smart phones to browse the internet. The study also recorded how much money people think they might save by switching and whether people had experienced ‘bill-shock’ (an unexpectedly high bill)

The Misperception of Inflation by Irish Consumers

Perceptions and forecasts of inflation have the potential to impact on a range of economic outcomes. We reveal large, systematic overestimation of inflation by Irish consumers, which varies by social group. In contrast to previous work in this area, our models suggest the upward bias and the variation by social group should be considered substantially separate phenomena. We also offer evidence that inflation misperceptions are linked to attitudes and intentions with respect to consumption and saving and, hence, are likely to affect household decision-making. The findings therefore raise issues regarding the relationship between financial literacy and consumer behaviour.

The perception of stereoscopic surfaces

Human stereoscopic vision depends upon the slightly different geometrical projections of the world to the two eyes. Horizontal disparities between the eyes produce the sensation of depth. But what is stereopsis for. One theory is that stereopsis extracts the spatial derivatives of horizontal disparity for the perception of shape and surface orientation. Discrimination tasks are devised here which compare sensitivity to the slant and curvature of stereoscopic surfaces with sensitivity to relative depth, both within and across tasks. Contrary to previous studies, where cues other than the second derivative were available, best Weber fractions for disparity curvature disrimination by these methods are no better than 15%. This compares with 6% for disparity gradient and 3.5 % for relative disparity. Discrimination of the orientation, size (or separation) and position of cyclopean corrugated surfaces reveals these stimulus attributes are discriminated as accurately as their counterparts in the luminance domain, provided the spatial scale is quite coarse. Other analogous results include the independence of spatial discriminations on relative disparity, the meridional anisotropy for cyclopean orientation discrimination and a range of relative disparity effects analogous to classical simultaneous contrast effects in luminance vision. It was also found, contrary to a previous study, that cyclopean textures could be segregated pre-attentively. These findings taken together imply that disparity is processed by spatial filters in a similar manner to luminance. This view of stereoscopic vision allows a fresh look at an old phenomenon: the stereoscopic slant anisotropy. An explanation is proposed on the basis of interactions between cyclopean spatial filters and a representation of disparity upon which they act. If sensitivity is a guide to function, stereopsis is for estimating the position, location, size and orientation of nearby objects, but probably not for estimating their shape

The framing of options for retirement: Experimental tests for policy. ESRI WP604, December 2018

We hypothesise and confirm a substantial framing effect in relation to whether people opt for an annuity on retirement. Two laboratory experiments were conducted in collaboration with a national pensions regulator. Individuals demanded a higher annuity rate when pensions were initially conceived of as an accumulated lump sum – a “nest egg” or “pension pot” – than when they were initially conceived of as retirement income. The effect was recorded using both a matching and a choice procedure. Effect sizes implied more than a doubling of demand for annuities at market rates. While mindful of the need for caution in generalising from hypothetical laboratory studies, the findings have potentially strong policy implications. The framing of pension products in marketing materials and disclosures may have substantial effects on financial risks borne in later life

Interventions to increase physical activity in disadvantaged communities: A review of behavioural mechanisms. ESRI Working Paper No. 646 December 2019

Physical inactivity is now a significant driver of health and social inequalities among socioeconomically disadvantaged communities and poses a major challenge to policymakers, worldwide. Although a vast amount of research has focused on designing and evaluating interventions to increase physical activity, there remains little consensus on which interventions are likely to work. In this narrative review, we build on previous reviews by not only examining what interventions tend to work but by trying to understand why certain interventions tend to work, while others do not, through the lens of behavioural science. We present a behavioural framework through which the existing body of physical activity research could be viewed, in order to identify potentially effective mechanisms that would be likely to work in their intended domain. Our analysis finds that while there is evidence that the physical and educational environment matter for increasing levels of physical activity, interventions are more likely to be successful where they involve a social component. We conclude that a behaviourally informed physical activity intervention would thus employ a set of focused educational and socially-mediated behavioural mechanisms, within an appropriate physical environment

Surplus Identification with Non-Linear Returns. ESRI WP522. December 2015

We present evidence from two experiments designed to quantify the impact of cognitive constraints on consumers' ability to identify surpluses. Participants made repeated forced-choice decisions about whether products conferred surpluses, comparing one or two plainly perceptible attributes against displayed prices. Returns to attributes varied in linearity, scale and relative weight. Despite the apparent simplicity of this task, in which participants were incentivised and able to attend fully to all relevant information, surplus identification was surprisingly imprecise and subject to systematic bias. Performance was unaffected by monotonic non-linearities in returns, but non-monotonic non-linearities reduced the likelihood of detecting a surplus. Regardless of the shape of returns, learning was minimal and largely confined to initial exposures. Although product value was objectively determined, participants exhibited biases previously observed in subjective discrete choice, suggesting common cognitive mechanisms. These findings have implications for consumer choice models and for ongoing attempts to account for cognitive constraints in applied microeconomic contexts

Motivating social distancing during the Covid-19 pandemic: An online experiment. ESRI Working Paper No. 658 April 2020

Social distancing during the COVID-19 pandemic will save lives. We tested communication strategies to promote social distancing via an online experiment (N = 500) commissioned by Ireland’s Department of Health. A control group saw a current informational poster. Two treatment groups saw similar posters with messages that highlighted: (i) the risk of transmission to identifiable persons vulnerable to COVID-19; (ii) the exponential nature of transmission. We then measured judgements of behaviours previously identified by focus groups as “marginal” (meaning that people were not sure whether they were advisable, such meeting others outdoors, or visiting parents). We recorded intention to undertake behaviours and stated acceptability of behaviours. Our hypotheses, that both treatments would increase participants’ caution about marginal behaviours, were preregistered (i.e. lodged with an international organisation for open science before data collection). Results confirmed the hypotheses. The findings suggest that the thought of infecting vulnerable people or large numbers of people can motivate social distancing. This has implications for communications strategies. The stud

An experiment for regulatory policy on broadband speed advertising. ESRI WP641, November 2019

Identifying whether hyperbolic advertising claims influence consumers is important for consumer protection, but differentiating mere “puffery” from misleading advertising is not straightforward. We conducted a pre-registered experiment to determine whether pseudo-technical advertising claims about broadband speed bias consumer choice. We tested whether these claims lead consumers to (i) make suboptimal choices and (ii) choose faster, more expensive broadband packages than they otherwise would. We also tested a potential policy response, consisting of consumer information on broadband speeds and how they are advertised. One-in-five consumers chose a provider advertising “lightning fast” broadband over another offering the same speed at a cheaper price. Puffery also led consumers to choose faster, more expensive packages than consumers who saw no such claims. The information intervention (i) decreased the proportion of suboptimal decisions, (ii) increased the likelihood that consumers switched package, and (iii) improved understanding of speed descriptions. The findings suggest that a relatively soft regulatory intervention may benefit broadband consumers

Consumer switching intentions for telecoms services: evidence from Ireland

Despite long-standing market liberalisation and efforts to reduce switching costs, many consumers have never switched telecoms provider. This paper investigates how consumer and service characteristics relate to switching intentions, using a sample of fixed-line broadband, mobile telephony and landline telephony customers from a 2015 survey conducted by ComReg, Ireland’s National Regulatory Authority. We add to previous work by examining a rich array of personal and service characteristics while controlling for both bill shock and expected gains from switching. We find that long-standing subscribers who have never switched are exceptionally resistant to switching. Bill shock is strongly associated with intention to switch, especially among those more inclined to switch. A similar effect arises for expected gains, especially gains over 20%. These results are consistent with both a preference for fair treatment and with behavioural barriers to switching that require large gains to overcome. The effects of bundling and of the few socioeconomic, supplier or application use characteristics that are statistically significant are smaller and not consistent across markets. This implies that willingness to switch is not simply a characteristic of certain social groups, but is more complex and context dependent

Surplus Identification with Non-Linear Returns. ESRI WP522. December 2015

We present evidence from two experiments designed to quantify the impact of cognitive constraints on consumers' ability to identify surpluses. Participants made repeated forced-choice decisions about whether products conferred surpluses, comparing one or two plainly perceptible attributes against displayed prices. Returns to attributes varied in linearity, scale and relative weight. Despite the apparent simplicity of this task, in which participants were incentivised and able to attend fully to all relevant information, surplus identification was surprisingly imprecise and subject to systematic bias. Performance was unaffected by monotonic non-linearities in returns, but non-monotonic non-linearities reduced the likelihood of detecting a surplus. Regardless of the shape of returns, learning was minimal and largely confined to initial exposures. Although product value was objectively determined, participants exhibited biases previously observed in subjective discrete choice, suggesting common cognitive mechanisms. These findings have implications for consumer choice models and for ongoing attempts to account for cognitive constraints in applied microeconomic contexts