CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

Abstract: 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 fi rst 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 nd that considering elimination-by-aspects behavior leads to a downward shift in elicited willingness-to-accept. We discuss implications for policy.

Keywords: Choice experiment; Electricity contract; Willingness-to-accept; Household electricity; Elimination-by-aspects; Two-stage decision

JEL-codes: C25; Q41; Q51; R21

23 pages, November 7, 2017

Full text files

872-accounting-for-e...contract-choice.html  

Download statistics

• CERE - the Center for Environmental and Resource Economics
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Mona Bonta Bergman ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:slucer:2017_007This page generated on 2024-09-13 22:17:07.