Abstract
Are individual consumers forward looking in consuming mobile data volume every day, subject to a monthly quota limit? If so, how can mobile carriers easily identify these forward-looking users and design profitable promotions targeting these users? We discover distinct temporal usage patterns that can distinguish forward-looking users from myopic ones. An empirical test is constructed to test for individual forward-looking behavior and applied to a unique data set of individual mobile data users’ daily usage volume over multiple months. We find a considerable proportion of users (about 40%) are indeed forward looking and also find empirical evidence of individual consumer myopia. Our dynamic structural model enables sophisticated counterfactual simulations incorporating various factors (e.g., consumer anticipation, plan switch) to deliver rich implications for targeted promotion design. As we find, promotions targeting only forward-looking consumers could be significantly more profitable than blanket promotions uniformly applied to all. Properly designed end-of-month promotions targeting forward-looking users could help mobile carriers fully utilize the otherwise excess network bandwidth and increase revenue at little extra cost.
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