Customers of the three companies that control most of Canada’ telecommunications services (Bell, Rogers and Telus) are trading in classical economic theories for confidence in these companies abilities to provide superior service. Classical mathematical economics would suggest rationally that the more people using a service or buying a product, the cheaper it will be. We know that this is not always true in Canada with internet, phone and cable prices. Robert Shiller and George A. Akerlof outline human psychological behaviour that affects financial markets in their book Animal Spirits. What I consider to be their most important argument is that investor’s actions are driven by stories, and the confidence, or lack of it, which results from these narratives. One of Shiller’s arguments is that we need to consider the social and psychological effects of society as well as individual behaviour and the influence or stories and narratives surrounding the market in order to fully understand why prices fluctuate (behavioural finance lecture, Yale University, 2009.) His theory is about investor behaviour, but can easily be related to consumer behaviour. Economically, rational pricing of products and services should be reactions to supply and demand, material, labour costs and other expenses. Relating this to overpriced services in the telecommunications sector, why are consumers irrationally paying more money for the same product or service they can receive at less than half the price? If we were behaving rationally in paying these prices, one would assume it is because we are getting better quality service. But this is not the case. Data collected by CBCnews reveals that Canadians work more hours a year to pay for the same cell phone plan compared to other countries. Below are hours worked per year for a determined cell phone package per country:
Canada: 30.55
Frace: 25.71
UK: 25.42
Ireland: 22.65
Iceland: 14.53
Austria: 14.31
Sweden: 11.01
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