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Using loss aversion to incentivize energy efficiency in a principal–agent context — Evidence from a field experiment

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  • Hoffmann, Christin
  • Thommes, Kirsten

Abstract

Promoting energy-efficient behavior of agents in a principal–agent context simultaneously decreases costs for firms and mitigates CO2 emissions. Along this line, we analyze the effect of incentive framing on energy-efficient driving behavior. Our results contribute to the understanding of the drawbacks of loss framing. In a situation with persistent labor market relations, an extremely low bonus, and heterogeneous prior performance, the introduction of a bonus framed as a gain outperforms that of a bonus framed as a loss.

Suggested Citation

  • Hoffmann, Christin & Thommes, Kirsten, 2020. "Using loss aversion to incentivize energy efficiency in a principal–agent context — Evidence from a field experiment," Economics Letters, Elsevier, vol. 189(C).
    • Handle: RePEc:eee:ecolet:v:189:y:2020:i:c:s0165176520300264
    DOI: 10.1016/j.econlet.2020.108984
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    References listed on IDEAS

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    Cited by:

    1. Pau Balart & Lara Ezquerra & Iñigo Hernandez-Arenaz, 2022. "Framing effects on risk-taking behavior: evidence from a field experiment in multiple-choice tests," Experimental Economics, Springer;Economic Science Association, vol. 25(4), pages 1268-1297, September.
    2. Hoffmann, Christin & Thommes, Kirsten, 2020. "Can digital feedback increase employee performance and energy efficiency in firms? Evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 49-65.
    3. Lorenz Götte & Egon Tripodi, 2022. "Social Recognition: Experimental Evidence from Blood Donors," CESifo Working Paper Series 9719, CESifo.

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    More about this item

    Keywords

    Energy-efficient behavior; Loss aversion; Field experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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