American Economic Review: Vol. 104 No. 4 (April 2014)

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Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use

Article Citation

Jessoe, Katrina, and David Rapson. 2014. "Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use." American Economic Review, 104(4): 1417-38.

DOI: 10.1257/aer.104.4.1417

Abstract

Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, lowcost information. We use a randomized control trial to test the effect of high-frequency information about residential electricity usage on the price elasticity of demand. Informed households are three standard deviations more responsive to temporary price increases, an effect that is not attributable to price salience. Conservation extends beyond pricing events in the short and medium run, providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement. Survey evidence suggests that information facilitates learning.

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Online Appendix (392.76 KB) | Download Data Set (17.38 KB) | Author Disclosure Statement(s) (82.38 KB)

Authors

Jessoe, Katrina (U CA, Davis)
Rapson, David (U CA, Davis)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
D83: Search; Learning; Information and Knowledge; Communication; Belief
L11: Production, Pricing, and Market Structure; Size Distribution of Firms
L94: Electric Utilities
Q41: Energy: Demand and Supply; Prices
Q54: Climate; Natural Disasters; Global Warming


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