Sophisticated Consumers with Inertia: Field Experiment

Key extract:

At the same time, consumers preempt their future inertia; 24%-36% of potential subscribers avoid subscribing when offered an auto-renewal promo. Further, offering an auto-renewal contract decreases the share of subscribers over the two years after the promo by 10%. Even though auto-renewal generates higher revenue in the medium-run due to payments from inert subscribers, auto-renewal and auto-cancel are revenue equivalent after one year, but with fewer subscribers in auto-renewal.