Abstract
Pay-how-you-drive (PHYD) is an innovative car insurance tariff offered by insurance companies, whereby prices are based on an individual’s driving style and mileage. In an experimental study, we analyze the effect of price framing on purchase intention for PHYD tariffs. Results demonstrate that consumers’ purchase intention for a PHYD tariff is higher for integrated price framing compared to segregated price framing. Also, we show that the amount of discount (surcharge) on the price moderates the effect of price framing on purchase intention for a PHYD tariff. Finally, we show that the sureness effect (i.e., sureness about having no unexpectedly high billing rates due to variation in driving style and mileage) mediates the effect of price framing and on purchase intention for PHYD tariff.
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