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An Evaluation of Attribute Anchoring Bias in a Choice Experimental Setting

Listed author(s):
  • Harmsen - van Hout, Marjolein

    ()

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Ghosh, Gaurav

    ()

    (Ernst & Young GmbH)

  • Madlener, Reinhard

    ()

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

We investigate consumer valuations of technical, home-related energy-saving measures (ESMs) and their attributes through a choice experiment. Unlike previous literature we expect heuristic decision-making, as decisions about ESMs are complex. Specifically, in our experimental design we focus on the effects of attribute anchoring through inclusion of an innovative element. We investigate anchoring-and-adjustment (A&A) in a choice-experimental framework, expecting it on attributes. Our question is: does A&A lead to a correct elicitation of the overall valuation or are adjustments insufficient, leading to attribute anchoring bias? To evaluate this, our participants can read attribute information only after clicking on covering buttons. Clicking data reveal what information they use in what order, which provides objective perceived ESM-attribute importance measures to be included as control variables in the estimations. For the experiment we perform a representative online survey among 1084 German residents. Mixed logit analysis cannot show that ESM valuations are affected by attribute anchoring bias, which indicates accuracy of our estimations, and through inference of those in other choice experiments. We also report statistics on ESM-attribute valuations differentiated by e.g. demographics, which is relevant for suppliers and policy-makers alike.

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Paper provided by E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN) in its series FCN Working Papers with number 6/2013.

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Length: 26 pages
Date of creation: Apr 2013
Handle: RePEc:ris:fcnwpa:2013_006
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  1. Ghosh, Gaurav & Kwasnica, Anthony & Shortle, James, 2010. "A Laboratory Experiment to Compare Two Market Institutions for Emissions Trading," FCN Working Papers 18/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  2. Madlener, Reinhard & Hauertmann, Maximilian, 2011. "Rebound Effects in German Residential Heating: Do Ownership and Income Matter?," FCN Working Papers 2/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  3. Kraas, Birk & Schroedter-Homscheidt, Marion & Pulvermüller, Benedikt & Madlener, Reinhard, 2011. "Economic Assessment of a Concentrating Solar Power Forecasting System for Participation in the Spanish Electricity Market," FCN Working Papers 12/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  4. Kroniger, Daniel & Madlener, Reinhard, 2014. "Hydrogen storage for wind parks: A real options evaluation for an optimal investment in more flexibility," Applied Energy, Elsevier, vol. 136(C), pages 931-946.
  5. Rohlfs, Wilko & Madlener, Reinhard, 2010. "Valuation of CCS-Ready Coal-Fired Power Plants: A Multi-Dimensional Real Options Approach," FCN Working Papers 7/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  6. Harmsen-van Hout, Marjolein J.W. & Dellaert, Benedict G.C. & Herings, P. Jean-Jacques, 2008. "Behavorial Effects in Individual Decisions of Network Formation," Research Memorandum 019, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  7. Holtermann, Timm & Madlener, Reinhard, 2011. "Assessment of the technological development and economic potential of photobioreactors," Applied Energy, Elsevier, vol. 88(5), pages 1906-1919, May.
  8. Kelvin Balcombe & Michail Bitzios & Iain Fraser & Janet Haddock-Fraser, 2014. "Using Attribute Importance Rankings Within Discrete Choice Experiments: An Application to Valuing Bread Attributes," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(2), pages 446-462, 06.
  9. Garbuzova, Maria & Madlener, Reinhard, 2012. "Russia’s Emerging ESCO Market: Prospects and Barriers for Energy Efficiency Investments," FCN Working Papers 6/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Sep 2012.
  10. Georg Erber & Reinhard Madlener, 2009. "Impact of ICT and Human Skills on the European Financial Intermediation Sector," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  11. Madlener, Reinhard & Specht, Jan Martin, 2013. "An Exploratory Economic Analysis of Underground Pumped-Storage Hydro Power Plants in Abandoned Coal Mines," FCN Working Papers 2/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  12. Ghosh, Gaurav & Shortle, James, 2009. "Water Quality Trading when Nonpoint Pollution Loads are Stochastic," FCN Working Papers 10/2009, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  13. Garbuzova, Maria & Madlener, Reinhard, 2011. "Towards an Efficient and Low-Carbon Economy Post-2012: Opportunities and Barriers for Foreign Companies in the Russian Market," FCN Working Papers 3/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Jul 2011.
  14. Grieser, Benno & Madlener, Reinhard & Sunak, Yasin, 2013. "Economics of Small Wind Power Plants in Urban Settings: An Empirical Investigation for Germany," FCN Working Papers 1/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  15. Tomm, Viktor & Madlener, Reinhard, 2010. "Appliance Endowment and User Behaviour by Age Group: Insights from a Swiss Micro-Survey on Residential Electricity Demand," FCN Working Papers 25/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  16. Dergiades, Theologos & Madlener, Reinhard & Christofidou, Georgia, 2012. "The Nexus between Natural Gas Spot and Futures Prices at NYMEX: Do Weather Shocks and Non-Linear Causality in Low Frequencies Matter?," FCN Working Papers 17/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Sep 2013.
  17. Ghosh, Gaurav & Carriazo, Fernando, 2009. "A Comparison of Three Methods of Estimation in the Context of Spatial Modeling," FCN Working Papers 9/2009, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  18. Westner, Günther & Madlener, Reinhard, 2011. "The Impact of Modified EU ETS Allocation Principles on the Economics of CHP-based District Heating Networks," FCN Working Papers 4/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  19. Achtnicht, Martin, 2011. "Do environmental benefits matter? Evidence from a choice experiment among house owners in Germany," Ecological Economics, Elsevier, vol. 70(11), pages 2191-2200, September.
  20. Paulun, Tobias & Feess, Eberhard & Madlener, Reinhard, 2010. "Why Higher Price Sensitivity of Consumers May Increase Average Prices: An Analysis of the European Electricity Market," FCN Working Papers 16/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  21. Rohlfs, Wilko & Madlener, Reinhard, 2010. "Cost Effectiveness of Carbon Capture-Ready Coal Power Plants with Delayed Retrofit," FCN Working Papers 8/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Dec 2010.
  22. Glensk, Barbara & Madlener, Reinhard, 2010. "Fuzzy Portfolio Optimization for Power Generation Assets," FCN Working Papers 10/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  23. Madlener, Reinhard & Glensk, Barbara & Weber, Veronika, 2011. "Fuzzy Portfolio Optimization of Onshore Wind Power Plants," FCN Working Papers 10/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Jul 2014.
  24. Harmsen - van Hout, Marjolein J.W. & Herings, P. Jean-Jacques & Dellaert, Benedict G.C., 2013. "Communication network formation with link specificity and value transferability," European Journal of Operational Research, Elsevier, vol. 229(1), pages 199-211.
  25. Gampert, Markus & Madlener, Reinhard, 2011. "Pan-European management of electricity portfolios: Risks and opportunities of contract bundling," Energy Policy, Elsevier, vol. 39(5), pages 2855-2865, May.
  26. Banfi, Silvia & Farsi, Mehdi & Filippini, Massimo & Jakob, Martin, 2008. "Willingness to pay for energy-saving measures in residential buildings," Energy Economics, Elsevier, vol. 30(2), pages 503-516, March.
  27. Bernstein, Ronald & Madlener, Reinhard, 2015. "Short- and long-run electricity demand elasticities at the subsectoral level: A cointegration analysis for German manufacturing industries," Energy Economics, Elsevier, vol. 48(C), pages 178-187.
  28. Sorda, Giovanni & Madlener, Reinhard, 2012. "Cost-Effectiveness of Lignocellulose Biorefineries and their Impact on the Deciduous Wood Markets in Germany," FCN Working Papers 8/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  29. Bernstein, Ronald & Madlener, Reinhard, 2011. "Residential Natural Gas Demand Elasticities in OECD Countries: An ARDL Bounds Testing Approach," FCN Working Papers 15/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  30. Wüstemeyer, Christoph & Bunn, Derek & Madlener, Reinhard, 2012. "Bridging the Gap between Onshore and Offshore Innovations by the European Wind Power Supply Industry: A Survey-based Analysis," FCN Working Papers 19/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  31. Poortinga, Wouter & Steg, Linda & Vlek, Charles & Wiersma, Gerwin, 2003. "Household preferences for energy-saving measures: A conjoint analysis," Journal of Economic Psychology, Elsevier, vol. 24(1), pages 49-64, February.
  32. Achtnicht, Martin & Madlener, Reinhard, 2014. "Factors influencing German house owners' preferences on energy retrofits," Energy Policy, Elsevier, vol. 68(C), pages 254-263.
  33. Lang, Joachim & Madlener, Reinhard, 2010. "Portfolio Optimization for Power Plants: The Impact of Credit Risk Mitigation and Margining," FCN Working Papers 11/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  34. Gro Steine & Kari Kolstad, 2006. "Consumers' Willingness to Pay for the Color of Salmon: A Choice Experiment with Real Economic Incentives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1050-1061.
  35. Lohwasser, Richard & Madlener, Reinhard, 2009. "Simulation of the European Electricity Market and CCS Development with the HECTOR Model," FCN Working Papers 6/2009, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  36. Melchior, Tobias & Madlener, Reinhard, 2012. "Economic evaluation of IGCC plants with hot gas cleaning," Applied Energy, Elsevier, vol. 97(C), pages 170-184.
  37. Lohwasser, Richard & Madlener, Reinhard, 2009. "Impact of CCS on the Economics of Coal-Fired Power Plants: Why Investment Costs Do and Efficiency Doesn’t Matter," FCN Working Papers 7/2009, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  38. Knaut, Andreas & Madlener, Reinhard & Rosen, Christiane & Vogt, Christian, 2012. "Effects of Temperature Uncertainty on the Valuation of Geothermal Projects: A Real Options Approach," FCN Working Papers 11/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  39. Rohlfs, Wilko & Madlener, Reinhard, 2013. "Assessment of clean-coal strategies: The questionable merits of carbon capture-readiness," Energy, Elsevier, vol. 52(C), pages 27-36.
  40. Harmsen - van Hout, Marjolein & Ghosh, Gaurav & Madlener, Reinhard, 2013. "The Impact of Green Framing on Consumers’ Valuations of Energy-Saving Measures," FCN Working Papers 7/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  41. Harmsen - van Hout, Marjolein J.W. & Herings, P. Jean-Jacques & Dellaert ,Benedict G.C., 2006. "The Structure of Online Consumer Communication Networks," Research Memorandum 028, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  42. Achtnicht, Martin, 2010. "Do environmental benefits matter? A choice experiment among house owners in Germany," ZEW Discussion Papers 10-094, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  43. Juckenack, Sören & Madlener, Reinhard, 2011. "Optimal Time to Start Serial Production: The Case of the Direct Drive Wind Turbine of Siemens Wind Power A/S," FCN Working Papers 6/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  44. Yadav, Manjit S, 1994. " How Buyers Evaluate Product Bundles: A Model of Anchoring and Adjustment," Journal of Consumer Research, Oxford University Press, vol. 21(2), pages 342-353, September.
  45. Stocker, Andrea & Großmann, Anett & Madlener, Reinhard & Wolter, Marc Ingo, 2011. "Sustainable energy development in Austria until 2020: Insights from applying the integrated model "e3.at"," Energy Policy, Elsevier, vol. 39(10), pages 6082-6099, October.
  46. Madlener, Reinhard & Wenk, Christioph, 2008. "Efficient Investment Portfolios for the Swiss Electricity Supply Sector," FCN Working Papers 2/2008, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  47. Schmitz, Matthias & Madlener, Reinhard, 2012. "Economic Feasibility of Kite-Based Wind Energy Powerships with CAES or Hydrogen Storage," FCN Working Papers 16/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  48. Glensk, Barbara & Madlener, Reinhard, 2011. "Dynamic Portfolio Selection Methods for Power Generation Assets," FCN Working Papers 16/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  49. Madlener, Reinhard & Glensk, Barbara, 2010. "Portfolio Impact of New Power Generation Investments of E.ON in the UK, Sweden and Germany," FCN Working Papers 17/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  50. Hinrichs, Hauke & Madlener, Reinhard & Pearson, Peter, 2010. "Liberalisation of Germany’s Electricity System and the Ways Forward of the Unbundling Process: A Historical Perspective and an Outlook," FCN Working Papers 26/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  51. Rosen, Christiane & Madlener, Reinhard, 2012. "Auction Design for Local Reserve Energy Markets," FCN Working Papers 7/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Mar 2013.
  52. Madlener, Reinhard & Ruschhaupt, Johannes, 2011. "Modeling the Influence of Network Externalities and Quality on Market Shares of Plug-in Hybrid Vehicles," FCN Working Papers 5/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  53. Ribaudo, Marc & Ghosh, Gaurav S. & Shortle, James S., 2009. "Do baseline requirements hinder trades in water quality trading programs?," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49258, Agricultural and Applied Economics Association.
  54. Bernstein, Ronald & Madlener, Reinhard, 2008. "The Impact of Disaggregated ICT Capital on Electricity Intensity of Production: Econometric Analysis of Major European Industries," FCN Working Papers 4/2008, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  55. Ghosh, Gaurav & Shortle, James, 2012. "Managing Pollution Risk through Emissions Trading," FCN Working Papers 1/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  56. Kumbaroğlu, Gürkan & Madlener, Reinhard, 2011. "Evaluation of Economically Optimal Retrofit Investment Options for Energy Savings in Buildings," FCN Working Papers 14/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  57. Bernstein, Ronald & Madlener, Reinhard, 2011. "Responsiveness of Residential Electricity Demand in OECD Countries: A Panel Cointegation and Causality Analysis," FCN Working Papers 8/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  58. Kraemer, Christian & Madlener, Reinhard, 2009. "Using Fuzzy Real Options Valuation for Assessing Investments in NGCC and CCS Energy Conversion Technology," FCN Working Papers 3/2009, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  59. Alfnes, Frode & Guttormsen, Atle G. & Steine, Gro & Kolstad, Kari, 2005. "Consumers' Willingness To Pay For The Color Of Salmon:A Choice Experiment With Real Economic Incentives," 2005 Annual meeting, July 24-27, Providence, RI 19126, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  60. Madlener, Reinhard & Tomm, Viktor, 2010. "Electricity Consumption of an Ageing Society: Empirical Evidence from a Swiss Household Survey," FCN Working Papers 24/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  61. Hampe, Jona & Madlener, Reinhard, 2012. "Economics of High-Temperature Nuclear Reactors for Industrial Cogeneration," FCN Working Papers 10/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  62. Omann, Ines & Kowalski, Katharina & Bohunovsky, Lisa & Madlener, Reinhard & Stagl, Sigrid, 2008. "The Influence of Social Preferences on Multi-Criteria Evaluation of Energy Scenarios," FCN Working Papers 3/2008, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  63. Lang, Joachim & Madlener, Reinhard, 2010. "Relevance of Risk Capital and Margining for the Valuation of Power Plants: Cash Requirements for Credit Risk Mitigation," FCN Working Papers 1/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  64. Mazur, Christoph & Madlener, Reinhard, 2010. "Impact of Plug-in Hybrid Electric Vehicles and Charging Regimes on Power Generation Costs and Emissions in Germany," FCN Working Papers 20/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  65. Madlener, Reinhard & Sicking, Stephan, 2011. "Assessing the Economic Potential of Microdrilling in Geothermal Exploration," FCN Working Papers 7/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  66. Michelsen, Carl Christian & Madlener, Reinhard, 2010. "Integrated Theoretical Framework for a Homeowner's Decision in Favor of an Innovative Residential Heating System," FCN Working Papers 2/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  67. Glensk, Barbara & Madlener, Reinhard, 2011. "Portfolio Selection Methods and their Empirical Applicability to Real Assets in Energy Markets," FCN Working Papers 11/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  68. Oberst, Christian & Oelgemöller, Jens, 2013. "Economic Growth and Regional Labor Market Development in German Regions: Okun’s Law in a Spatial Context," FCN Working Papers 5/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  69. Madlener, Reinhard & Glensk, Barbara & Raymond, Paul, 2009. "Investigation of E.ON’s Power Generation Assets by Using Mean-Variance Portfolio Analysis," FCN Working Papers 12/2009, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
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