Addressing self-disconnection among prepayment energy consumers: A behavioural approach

Marta Rocha, Michelle Baddeley and Michael Pollitt

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper uses insights from the study of self-control in decision-making to remedy the problem of self-disconnection among energy prepayment consumers. Self-disconnection happens when consumers exhaust all available credit in their meter and are left without supply of energy. This has serious consequences for the wellbeing of consumers and may increase firms' costs. We design a mechanism composed of a commitment contract and a reminder in order to minimize the number of self—disconnectons. We empirically assess this mechanism by examining (1) the determinants of self-disconnecton and (2) the choice of different commitment contracts. we show that self-control plays a role in self-disconnection and we are able to identify in our sample, those consumers who benefit from a commitment contract. Moreover we find a demand to commitment and an opportunity to save among those consumers who need a commitment contract.

Keywords: Commitment contract Self control; Prepayment meter Self-disconnection; Reminder Classification-JEL 003, 012, D91 (search for similar items in EconPapers)
Date: 2013-05-12
New Economics Papers: this item is included in nep-cbe and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Addressing self-disconnection among prepayment energy consumers: A behavioural approach (2019)
Working Paper: Addressing self-disconnection among prepayment energy consumers: A behavioural approach (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1353

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