Micro-costs: Inertia in Television Viewing

Fabrizio Perretti published in The Economic Journal

Fabrizio Perretti (Department of Management and Tecnology) published Micro-costs: Inertia in Television Viewing in The Economic Journal, March 2012, doi: 10.1111/j.1468-0297.2012.02507.x, with Constança Esteves-Sorenson (Yale School of Management).

Abstract: We document substantial default effects despite negligible switching costs in a novel setting: television programme choice in Italy. Despite the low costs of clicking the remote and of searching across only six channels and viewers’ extensive experience with the decision, show choice depends strongly on whether viewers happened to watch the previous programme on the channel. Specifically, male and female viewership of the news depends on whether the preceding programme appealed to men or women, and a show’s audience increases by 2-4% with an increase of 10% in the demand for the preceding programme. These results are robust to endogenous scheduling.