Defense:
Estimating certainty, risk and
time effects on the expected
utility for energy contracts
Focus of study
More research needed into how consumers form expected utilities
- Uncertainty about knowledge
- Risk aversion
- Decisions over time
Which method captures these effects in a better way?
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Conjoint analysis with stated choices
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Conjoint analysis with elicited probabilities
Empirically applied to Dutch market for consumer gas contracts
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Liberalization energymarket has increased choice complexity
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Complexity makes preference predictions more difficult
H1: The conjoint analysis with elicited probabilities has greater statistical significance than the conjoint analysis with stated choices
H2: The discounting of utility over time will be hyperbolic in nature. H3: Risk averse consumers will prefer fixed tariff contracts that are (A) relatively short and (B) larger welcoming presents
H4: Consumers who are uncertain about the development of energy prices will prefer fixed tariff contracts that are (A) relatively short (1 or 2 years) and (B) larger welcoming presents.
H5: Risk averse consumers will prefer higher fixed supply costs under the condition that this leads to a decline in the pay per use tariff.
H6: Consumers who are uncertain about their usage of energy will prefer higher base rates under the condition that this leads to a decline in the pay per use tariff.
H7: If a risk indifferent consumer expects energy prices to drop they will have a preference for (A) contracts with variable tariffs without contract duration and (B) low welcoming presents.
H8: If a consumer feels certain about his expectation for energy prices to drop they will have a preference for (A) contracts with variable tariffs without contract duration and (B) low welcoming presents.
