【公开学术报告】Addictive Digital-Content Consumption and Strategic Self-Control

Topic: Addictive Digital-Content Consumption and Strategic Self-Control（成瘾性数字内容消费和策略性自我控制行为）

Date & Time: 9:30-11:00am, Fri. 20^th, September 2019 

Venue: Room 2101, Tongji Building A

Language: English

Speaker：Dr. Shuo ZHANG (Washington University in St. Louis)

ABSTRACT

This paper studies how consumers exhibit time-inconsistent preference in the context of digital content consumption and how they may self-control their consumption. We focus on web-fiction reading, which is a prevalent phenomenon among Asian consumers. We use a unique dataset obtained from a major digital book platform in China where consumers can either pay by monthly subscription or per chapter, and find that one third of consumers consistently choose to pay per chapter even though a monthly subscription would significantly reduce the monetary cost. We propose a dynamic structural model that incorporates addictive consumption and strategic self-control behaviors to rationalize the overpaying behavior. We first demonstrate from an analytical model the existence of a uniqueness equilibrium, and show how under steady states, overpaying for reading may be optimal for consumers. We then estimate an econometric model from the data. Results show a large consumer segment with high price sensitivity consistently overpays by choosing to pay per chapter. Other segments are more likely to choose a monthly subscription and thus are more addicted. We then use counterfactuals to show that eliminating the pay-per-chapter plan would hurt not only consumer welfare, but also the company’s profit. Eliminating the monthly subscription plan, however, would significantly increase the company’s revenue while only slightly decreasing consumer welfare. Finally, we find that a nonlinear pricing plan with increasing marginal cost could achieve similar revenue increase for the company and significantly improves the consumer welfare compared to current linear pricing plan.