Buying without using: Biases of German BahnCard buyers

Schmale Hendrik, Ehrmann Thomas, Dilger Alexander

Abstract

We use a large data set of German railway travellers to analyse the purchasing decision for fare-reducing BahnCards. We expect that this tariff choice is neither completely rational nor irrational, but bounded-rational in a meaningful way. Actually we predict a flat-rate bias, i.e. an under-use of their BahnCards by many customers. However, we estimate that this bias is not too large. The empirical results approve our hypotheses for the most part, especially for the more expensive BahnCard50 (BC50), whereas the under-use of the cheaper BahnCard25 (BC25) is so extensive that it is not worthwhile on average. © 2013 Copyright Taylor and Francis Group, LLC.