TY - JOUR

T1 - Myopic loss aversion in the response of electric vehicle owners to the scheduling and pricing of vehicle charging

AU - Fetene, Gebeyehu Manie

AU - Kaplan, Sigal

AU - Sebald, Alexander Christopher

AU - Prato, Carlo Giacomo

PY - 2017/1

Y1 - 2017/1

N2 - Upward expectations of future electric vehicle (EV) growth pose the question about the future load on the electricity grid. While existing literature on EV charging demand management has focused on technical aspects and considered EV-owners as utility maximizers, this study proposes a behavioural model incorporating psychological aspects relevant to EV-owners facing charging decisions and interacting with the supplier. The behavioural model represents utility maximization under myopic loss aversion (MLA) within an ultimatum game (UG) framework where the two players are the EV-owner and the electricity supplier. Experimental economics allowed testing the validity of the behavioural model by designing three experiments where a potential EV-owner faces three decisions (i.e., to postpone EV charging to off-peak periods for a discount proposed by the supplier, the amount of discount to request for off-peak charging at times decided by the supplier, and the amount of discount to accept for supplier-controlled charging) under two contract durations (i.e., short-term, long-term). Findings from the experiments show that indeed potential EV-owners perform charging decisions while being affected by MLA resulting from monetary considerations and the UG participation, and that presenting long-term contracts help potential EV-owners to curtail MLA behaviour and minimise cost even though the assumption of utility maximization is violated.

AB - Upward expectations of future electric vehicle (EV) growth pose the question about the future load on the electricity grid. While existing literature on EV charging demand management has focused on technical aspects and considered EV-owners as utility maximizers, this study proposes a behavioural model incorporating psychological aspects relevant to EV-owners facing charging decisions and interacting with the supplier. The behavioural model represents utility maximization under myopic loss aversion (MLA) within an ultimatum game (UG) framework where the two players are the EV-owner and the electricity supplier. Experimental economics allowed testing the validity of the behavioural model by designing three experiments where a potential EV-owner faces three decisions (i.e., to postpone EV charging to off-peak periods for a discount proposed by the supplier, the amount of discount to request for off-peak charging at times decided by the supplier, and the amount of discount to accept for supplier-controlled charging) under two contract durations (i.e., short-term, long-term). Findings from the experiments show that indeed potential EV-owners perform charging decisions while being affected by MLA resulting from monetary considerations and the UG participation, and that presenting long-term contracts help potential EV-owners to curtail MLA behaviour and minimise cost even though the assumption of utility maximization is violated.

KW - Faculty of Social Sciences

KW - Electric vehicles

KW - Charging decisions

KW - Smart grid charging

KW - Utility maximization

KW - Myopic loss aversion

KW - Ultimatum two-player game

KW - Electric vehicles

KW - Charging decisions

KW - Smart grid charging

KW - Utility maximization

KW - Myopic loss aversion

KW - Ultimatum two-player game

U2 - 10.1016/j.trd.2016.11.020

DO - 10.1016/j.trd.2016.11.020

M3 - Journal article

VL - 50

SP - 345

EP - 356

JO - Transportation Research, Part D: Transport and Environment

JF - Transportation Research, Part D: Transport and Environment

SN - 1361-9209

ER -