Strategic and behavioral responses of consumers and producers to energy and environmental policies

By empirically and experimentally testing the limitations and constraints to decision-making, this dissertation investigates how behavioral anomalies in individual and organizational decisions shape responses to environmental and energy policies. Chapter I gives and overview and discusses the scope of this dissertation. Chapter II studies the behavioral responses of builders to the Leadership in Energy and Environmental Design (LEED) system in the U.S., which certifies the energy efficiency and sustainability class of buildings by introducing discrete label thresholds. By exploiting the changes in incentives created by the certification cutoffs, we show that higher energy prices induce project developers to pay more attention to the underlying energy efficiency measures. By designing a laboratory experiment, Chapter III investigates whether consumers buy electricity strategically under a dynamic pricing scheme. Although we find that consumers buy rationally on average, we observe systematic deviations from rationality (i.e., myopic buying or irrational waiting). In Chapter IV, we design a randomized controlled laboratory experiment and examine the effects of the default and the number of alternatives on electricity tariff choices. We find that active choice enforcement strategies improve decision outcomes compared to default rules for the standard electricity providers.