The Wharton School
Professor Raghu Iyengar's research investigates how consumers respond to nonlinear pricing schemes. Recently, Iyengar considered the impact of nonlinear pricing schemes within wireless services and modeled how consumers learn about their own consumption as well as the quality of a service provider. He found that both quality and quantity learning are important factors of the model and this dual learning, in turn, affects consumers' choice of service plans and consumption of minutes. He also found that that about 90 percent of quality learning takes place within the first five service encounters. This suggests that the first few service encounters are critical for firms as consumers rapidly form beliefs about the quality of a firm's service from these first impressions.
Professor Iyengar's other current research projects focus on optimal design of nonlinear pricing schemes using conjoint analysis, semiparametric methods for modeling heterogeneity, and structural models of social networks.