Cognitive Friction and Rooftop Solar Adoption: Evidence from a Latent Class WTA Model in Rural China

Zenghui Chao, Wenhao Gu, Chenguang Xu and Jun Zhang

No 404857, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: This paper studies how cognitive friction shapes rural households’ willingness to lease rooftops for distributed solar photovoltaics. Using double-bounded WTA survey data from 311 households in Pingdingshan, Henan Province, we estimate a two-class latent class model that allows households to follow different information-processing rules. About 66.8 percent of households belong to a policy-familiar class that incorporates return confidence into project valuation. Their mean WTA is 31.03 yuan per square meter per year, compared with 57.38 yuan for the policy-unfamiliar class. Counterfactual simulations show that improving return confidence and policy familiarity can sharply raise participation and substitute for cash subsidies. Raising both to their highest levels increases zero-subsidy participation from 15.1 percent to 88.7 percent and generates substantial annual CO2 abatement.

Keywords: Consumer/Household; Economics (search for similar items in EconPapers)
Pages: 30
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404857

DOI: 10.22004/ag.econ.404857

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