Behavioural economics analysis of innovative tariffs: the case of electricity

Nowadays, one of the main problems in the world is the air pollution caused by the emissions of the greenhouse gases (GHG), such as carbon dioxide, ozone, nitrous oxide. These emissions are generated by several factors, including the energy sector, whose emissions due to electricity and heat, in 2016, constituted 42% of the total emissions with serious effects on climate change. In order to overcome the problem of the pollution there are essentially 4 types of “prevent actions”: tax on CO2, development of renewable energy, new tariff structures and nudge techniques. This thesis focuses on the role of the new tariff structures in encouraging people to be more aware of their behaviours and aims to understand if the different pricing policies are able to modify customers’ habits. Regarding this topic, literature suggests that the structure of tariffs would be one of the most efficient techniques to encourage customers to have a pro-environment behaviour. In fact, in a theoretical world, a rational individual would change his habits in according to the new tariff in order to gain a profit. However, in the last years the Behavioural Economics has highlighted that in the real world, people are characterized by some bias, including irrationality, which influence their decisions and make some new tariff structures ineffective. In this context it is important to look into the issue of consumer perception of tariff. For this purpose, we carried out a lab experiment with a sample of 238 people in which we compared a linear tariff with two non-linear tariff to analyse people's preferences and perceptions of the electricity tariffs. A second objective of the experiment was to investigate if people are able to adapt their choices once given the information necessary to adopt a more environmentally friendly behaviour. The results confirm the main cognitive biases identifies in the literature and show both that consumers prefer the tariff with the simplest structure and that they are characterized by some bias which does not allow them to adapt their choices with the most profitable tariff.