Economics at your fingertips  

Price Transparency in Residential Electricity: Experiments for Regulatory Policy

Pete Lunn and Marek Bohacek

No WP543, Papers from Economic and Social Research Institute (ESRI)

Abstract: Two laboratory studies investigated the effect of price transparency on consumers’ decision-making in the residential electricity market. The first tested whether consumers have difficulties when confronted with unit prices expressed as discounts from standard rates, which vary between suppliers. Results showed that consumers were much more likely to choose packages with low unit prices when unit prices were presented explicitly rather than as discounts. When discounts were described as percentages, consumers’ decisions were also less accurate. The second study pre-tested the likely impact of a potential mandatory “estimated annual bill” (EAB) on marketing material, calculated for a customer with average usage. Results demonstrated that consumers were more likely to judge value according to unit prices when an EAB appeared on advertisements. Moreover, when unit prices were communicated via an EAB rather than a discount, consumers chose lower unit price offerings and were more precise in their decision-making. The findings suggest that the EAB is likely to be beneficial for consumers’ decision-making.

New Economics Papers: this item is included in nep-com, nep-ene and nep-reg
Date: 2016-10
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Working Paper: Price Transparency in Residential Electricity: Experiments for Regulatory Policy (2018) Downloads
Journal Article: Price transparency in residential electricity: Experiments for regulatory policy (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Papers from Economic and Social Research Institute (ESRI) Contact information at EDIRC.
Bibliographic data for series maintained by Sarah Burns ().

Page updated 2019-07-22
Handle: RePEc:esr:wpaper:wp543