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Accounting for Elimination-by-Aspects Strategies and Demand Management in Electricity Contract Choice
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics. Umeå University, Faculty of Social Sciences, Centre for Environmental and Resource Economics (CERE).ORCID iD: 0000-0003-4061-3701
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics. Umeå University, Faculty of Social Sciences, Centre for Environmental and Resource Economics (CERE).
2017 (English)Report (Other academic)
Abstract [en]

We report on a discrete choice experiment aimed at eliciting Swedish households’ willingness-to-accept a compensation for restrictions on household electricity and heating use during peak hours. When analyzing data from discrete choice experiments, we typically assume that people make rational utility maximizing decisions, i.e., that they consider all of the attribute information and compare all alternatives. However, mounting evidence shows that people use a wide range of simplifying strategies that are inconsistent with utility maximization. We use a flexible model capturing a two-stage decision process. In the first stage, respondents are allowed to eliminate from their choice set alternatives that contain an unacceptable level, i.e., restrictions on the use of heating and electricity. In the second stage, respondents choose in a compensatory manner between the remaining alternatives. Our results show that about half of our respondents choose according to an elimination-by-aspects strategy, and that, on average, they are unwilling to accept any restrictions on heating in the evening or electricity use, irrespective of time-of-day. Furthermore, we find that considering elimination-by-aspects behavior leads to a downward shift in elicited willingness-to-accept. We discuss implications for policy.

Place, publisher, year, edition, pages
Umeå, 2017.
Series
CERE Working Paper ; 2017:7
Keywords [en]
Choice experiment, Electricity contract, Willingness-to-accept, Household electricity, Elimination-by-aspects, Two-stage decision
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-145713OAI: oai:DiVA.org:umu-145713DiVA, id: diva2:1190571
Available from: 2018-03-15 Created: 2018-03-15 Last updated: 2019-05-27Bibliographically approved

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Daniel, Aemiro MelkamuPersson, Lars

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf