Friday, November 4, 2011

Season Tickets and Sunk Cost

This is an interesting study I came across reading "Sway" by Ori and Rom Brafman. It's a 1985 paper on sunk cost by Hal Arkes and Catherine Blumer. In it, they study the behavior of people who come to a university box office to purchase season tickets. They offer the people arbitrary discounts, and then see who comes more often. The result? The subscribers who paid MORE attended more performances.

Here's a link to an excerpt from the article: http://books.google.com/books?id=vKmCjtm0l48C&lpg=PA97&ots=SeMIT47Tbj&lr&pg=PA99#v=onepage&q&f=true

The full article is available for purchase, but the relevant part about the subscribers is excerpted in the link.

The full article citation is "The Psychology of Sunk Cost" by Hal Arkes and Catherine Blumer.

I'm interested to comb through the usage rates of my own subscribers to see if there's a correlation - although, given that the subscribers chooses the price point rather than the researchers (as in the above-cited study) I wouldn't necessarily predict the same behavior. If anyone has looked at the usage rates of their season packages, I'd be interested to know whether the usage rates vary with the price points.