Pricing experiments for a computer-telephony-service usage allocation

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Abstract
Charging a higher price during periods of congestion should more efficiently allocate scarce resources by encouraging users to conserve. We study its benefits by conducting several pricing experiments over two semesters with students in the dormitories using a computer-telephony-service. Users can use the service to make and receive phone calls from their computers or phones. While we do not charge users real money, we limit each user to a certain number of tokens a week. With this experimental setup, we conducted a different pricing experiment each week to better understand how prices can be used to entice users to talk less, talk at another time, or use a lower quality connection. With our token scheme as a budget constraint, we can use static pricing policies to influence users' behaviors, but cannot use a simple congestion pricing scheme to encourage users to talk less. For example, we can use time-of-day pricing to encourage users to shift 30% of their usages from the peak to the off-peak hours. We can also use call-duration pricing, a higher rate as a call lasts longer, to encourage 3 times as many calls (18% instead of 6%) to terminate after a price increase. However, when using a simple congestion pricing scheme that charges a rate depending on the number of people calling, we find that we cannot get users to terminate their calls earlier. We believe that users do not change their behaviors because they do not know how long the price increases or decreases will last. Thus to make a congestion pricing scheme more effective, we believe that the price changes need to be more permanent to entice users to change their behaviors1.

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