Do Consumers Understand PCP Car Finance? An Experimental Investigation

McElvaney, Terence J.; Lunn, Pete; McGowan, Féidhlim

doi:10.1007/s10603-018-9380-5

Cited by 5 publications

(4 citation statements)

References 59 publications

(45 reference statements)

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“…Although hypothetical measures of preference and (perhaps especially) willingness to pay can be subject to "hypothetical bias" (Harrison and Rutström, 2008), measures of capability are likely to be more reliable and can be incentivised (Lunn and Ní Choisdealbha, 2018). Exploratory designs that assess the accuracy of decision making at different stages of purchase have been successful in providing a wide range of insights in other public policy domains, for example in the regulation of car finance (McElvaney et al, 2018). For present purposes, we designed an exploratory laboratory experiment to record consumer decisions between ToU tariffs in a controlled environment.…”

Section: ) What Information Can Help Consumers Choose Between Tou Tamentioning

confidence: 99%

Smart choices? An experimental study of smart meters and time-of-use tariffs in Ireland

Belton

Lunn

2020

Energy Policy

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The introduction of smart technology and dynamic tariffs (such as time-of-use tariffs) provides multiple potential benefits for electricity markets. However, time-of-use tariffs represent an additional complexity for consumer tariff choices in electricity markets. How well consumers may choose between different types of tariffs, and whether certain tools can improve these choices, are therefore important questions for energy regulators and policy makers. This paper presents the results of an exploratory study that used experimental behavioural science to explore the issue of consumer choice in electricity markets for time-of-use tariffs. A representative sample of consumers (n= 145) were given information about smart meters and time-of-use tariffs. Attitudes towards smart meters and comprehension and choice quality between different types of electricity tariffs (judged against participants' own perceptions of their electricity usage) was measured through a sequence of experimental tasks. Findings suggest that a general aversion to time-of-use tariffs may lead to sub-optimal choices between different types of tariffs. Participants were also asked to choose between different priced time-of-use tariffs via an experimental price comparison site. Tools which facilitate personalised estimated costs were shown to significantly improve decision-making between such tariffs. Potential policy implications, in light of these findings, are discussed.

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Section: ) What Information Can Help Consumers Choose Between Tou Tamentioning

confidence: 99%

Smart choices? An experimental study of smart meters and time-of-use tariffs in Ireland

Belton

Lunn

2020

Energy Policy

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“…Our results thereby contribute to the literature on how consumers evaluate prices presented in different formats and the influences of framing on consumers' perceptions of price (Gonz alez et al, 2016;Liu and Chou, 2015), and highlight that presenting costs in dollars over time may generate a better understanding of costs in a complex setting. While much of the previous research on different formats, such as percentages or dollars) has focused on relatively simple services/goods, this contributes to the literature on how costs are evaluated in complex settings (Homburg et al, 2014;McElvaney et al, 2018).…”

Section: General Discussion and Contributionsmentioning

confidence: 99%

“…While much of the previous research on different formats, such as percentages or dollars) has focused on relatively simple services/goods, this contributes to the literature on how costs are evaluated in complex settings (Homburg et al. , 2014; McElvaney et al. , 2018).…”

Section: General Discussion and Contributionsmentioning

confidence: 99%

How consumers evaluate costs in complex services: the case of mutual fund fees

Nilsson,

Carlsson Hauff,

Carlander

2024

EJM

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Purpose In modern societies, consumer well-being is dependent on choices regarding complex services, such as investments, health care, insurance and lending. However, evaluating costs of such services is often difficult for consumers due to a combination of limited cognitive resources and complexity of the service. The purpose of this study is to empirically examine to what extent three specific consequences of complexity influence consumer tendencies to make mistakes when evaluating the costs (or price) of complex services. Design/methodology/approach Three studies were conducted (survey: n = 153, experiment: n = 332 and conjoint analysis: n = 225), all focusing on how consumers evaluate costs in the complex mutual fund setting. Findings The authors find that consumers struggle with estimating and using cost information in decision-making in the complex services setting. Consumers of complex services frequently underestimate the costs over the long-term, may see costs as a signal of service quality and are susceptible to influence from presentation formats when evaluating costs. Research limitations/implications The study investigates mutual funds, which is one example of a complex service. In order to get a full picture of how consumers deal with costs in complex setting, future research needs to expand this focus to other types of complex services. Practical implications The results have implications for both marketers of complex services and policymakers. For marketers, this paper highlights that competing with a low-cost strategy may be difficult in the complex services setting as consumers may lack the ability to actually evaluate what they pay over the long term. For policymakers, increased simplification of prices may be an attractive option. However, it is important that this simplification is done in a way that increases the possibility to compare prices. Originality/value As complexity influences several aspects of decision-making, an understanding of how consumers evaluate costs in complex settings is dependent on taking a multidimensional research approach. This paper makes a novel contribution to the literature on pricing by showing that consumers struggle with multiple aspects when evaluating costs in complex contexts. Understanding these effects is important to policy, as well as to research on the cognitive value of simplicity that is currently gaining traction in marketing research.

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“…Despite their probability of being "hypothetically biased", hypothetical actions of favoritism and motivation to pay [11] in addition to procedures of ability are probably more consistent and can be motivated through incentives [12]. Investigative set-ups that evaluate the precision of resolution-taking at diverse phases of procurement turned out to be victorious in suggesting a broad collection of perspectives in all community plan areas, such as in the ruling of automobile economics [13].…”

Section: Introductionmentioning

confidence: 99%

An Investigation into Pricing Policies in Smart Grids

Dekhandji

Recioui

2022

The 1st International Conference on Computational Engineering and Intelligent Systems

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One achievement in smart grids is the construction of smart cities. In this kind of city houses are equipped with smart meters that can record electric energy as well as transmit and accept data regarding energy utilization and prices to consumers. Additionally, new methods, known as real-time pricing of electricity, have been introduced in which energy prices change based on an hourly timeline and depend on consumers’ energy requests. Due to the production of electricity by PV panels, a smart grid will share the surplus of the energy provided by the panels to the grid. These pricing policies will force and encourage consumers to track their power consumption and use renewable energies. In this paper, the impacts of pricing policy on the reduction in consumers’ power consumption are investigated. A small-scale smart city is presented and a policy is applied to it. Additionally, an implementation through a simulation of some houses equipped with renewable energy sources is done to study their effect on the grid performance.

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Do Consumers Understand PCP Car Finance? An Experimental Investigation

Cited by 5 publications

References 59 publications

Smart choices? An experimental study of smart meters and time-of-use tariffs in Ireland

Smart choices? An experimental study of smart meters and time-of-use tariffs in Ireland

How consumers evaluate costs in complex services: the case of mutual fund fees

An Investigation into Pricing Policies in Smart Grids

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