Empirical studies provide evidence that many consumers prefer a flat-rate, even though their billing rate would be lower on a pay-per-use tariff. When it comes to tariff choices, some consumers thus seem to be subject to a cognitive error, a so-called “flat-rate bias”. Based on survey data, we analyse causes and strategies to enhance the occurrence and intensity of flat-rate biases within 2 studies. The results of study 1 (n=104) point out to five important drivers of flat-rate biases, namely the taximeter, insurance, overestimation, convenience and smart-shopping effect. Within study 2 (n=416), we subsequently evaluate the effectiveness of advertisements using the identified causes for a flat-rate bias as setting levers to increase consumers' tariff-specific willingness-to-pay. Our findings show that the most effective way to enhance the return on flat-rate bias would be to enhance communication of the fact that consumers can protect themselves from fluctuations in the billing amount through a flat rate (insurance effect) and that consumers must not worry about costs when using a flat rate (taximeter effect).

Every company is buzzing “innovation” these days, while continuously developing and launching new products. However, empirical research points to high failure rates of innovations, indicating that most new products fail as they are rejected by consumers due to their resistance to innovation. Using a scenario-based experiment, we show that innovation resistance evolves from individual’s inclination to resist changes (cognitive resistance) and status quo satisfaction (situational resistance), inhibiting new product adoption. While consumers high on cognitive or situational resistance were shown to exhibit negative effects, that were similar in their magnitude, consumers high on both dimensions show the strongest predisposition to resist innovations. Thus, these consumers represent the most crucial segment when it comes to new product launches.