Abstract Summary
A price of zero is psychologically more attractive than it would be expected from pure monetary savings. Towns around the world attempted to remove public transportation fares, but critics point to limited success in ridership increase and high costs. Shared bicycles provide us with detailed data about free transportation, and discontinuities between free and paid services persist regardless of magnitude of price change and of whether the marginal cost of a minute is constant or not. Trip chaining behavior exists, but is not sufficient to explain more than a small part of the discontinuity. The distribution best-fitting to paid trips is usually the power law. It differs from the optimal distribution in the free part -- lognormal or Weibull. A natural experiment with changing prices in New York reveals the magnitude of pure zero-price effect, with the results signifying also the existence of anchoring effect. The results may support changes in pricing strategy also for other public transportation modes.
