Nudges and peak pricing: A common pool resource energy conservation experiment

Penelope Buckley and Daniel Llerena

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2022, vol. 101, issue C

Abstract: Using a contextualised common pool resource framework, individual energy consumption choices are studied. Individuals are nudged towards the socially optimal level of consumption by the use of a happy (sad) face if they are underconsuming (overconsuming). A price is set to incentivise a second group to choose the level of consumption observed in the nudge treatment in order to quantify the nudge via an equivalent price. Across all 10 periods, consumption is significantly lower in treatment groups compared to control groups without nudges and prices. The price treatment leads to an average level of consumption above the Nash equilibrium. There are implications for policy makers as the nudge treatment performs as well, on average, as an equivalent price without the implied loss of welfare, and is understood and integrated into subjects’ decision making quicker than an equivalent price. However, there is a tendency for both the nudge and the price to reinforce existing consumption behaviour as those who overconsume continue to overconsume.

Keywords: Energy conservation; Financial incentive; Laboratory experiment; Nudge (search for similar items in EconPapers)
JEL-codes: C91 H31 Q40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:101:y:2022:i:c:s2214804322000994

DOI: 10.1016/j.socec.2022.101928

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