Information Acquisition, Dynamic Pricing of Electricity, and Conservation Requests: Evidence from a Field Experiment

Abstract

This article uses panel data on how frequently households use in-home displays (IHD) in a randomized field experiment to investigate how acquiring information from IHDs affects electricity usage of households facing either dynamic pricing of electricity or conservation requests. Providing IHDs, which enables households to see a graph of their half-hourly electricity consumption in real time, is a promising policy intervention that corrects for biases associated with inattention and limited information-processing capacity by promoting salience and learning. Contrary to the energy-conservation literature, I find that IHD usage consistently raised electricity consumption of households. This perverse impact of IHD usage on energy conservation increased through learning over time as the experiment proceeds. However, an interactive effect of IHD provision and dynamic pricing implies that providing an IHD together with pecuniary incentive schemes could be effective in energy conservation.