Research on Individual Decision Making on Payment Instruments Choice

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In this research, we attempted to analyze the effect of diffusion of electronic money on individual decision making on small payment instrument choice. For that purpose, we conducted the survey on the same consumers for 2 years, and made the empirical analysis by constructing the panel data.We found that the payment instrument choice behavior of the consumers with high frequent use of e-money was consistent with the existing microeconomic theory which was popular among United States and Western Europe. On the other hand, as for the consumers who keep on prefer cash, it is difficult to consistently interpret their decision making behavior by the existing theoretical model.The small payment market in Japan is quite unique in that cash dominates other payment instruments. When we investigate Japanese small payment market, it is essential that we take into account the other transaction cost such as "facility for an account balance inquiry", which was ignored by the earlier literature.