Consumer Perception of Mobile Telephony Taris with Cost Caps

In this article we provide a seminal academic investigation of mo-bile telephony consumers' perception of the recently introduced costcap tari in comparison to corresponding pay-per-use and atrate call-ing plans. Previous studies have identied several psychological eectsthrough which consumers are believed to be biased towards atrateplans. However, atrate plans also limit customers' tari exibility inmonths of low usage. Cost cap taris are a hybrid between pay-per-useand atrate plans and can oer cost insurance while maintaining ex-ibility. In particular, we provide evidence from a survey among 214German university students that exibility, cost insurance and theso-called taximeter eect are the main drivers behind cost cap tarichoice. Furthermore, we show that the insurance and taximeter eectsare distinct if evaluated within a atrate or cost cap tari framework.Finally, based on our results we also comment on the protability ofcost cap plans from a strategic management perspective.