How peer effects influence energy consumption
Name
1703.00980.pdf
Description
Published version
Size
576.28 KB
Format
Adobe PDF
Checksum (MD5)
bcd6cc95c743aa1eb5cf05d286abef94
Author(s)
Zhou, Datong P.
Roozbehani, Mardavij
Dahleh, Munther A
Tomlin, Claire J.
Date Issued
January 2018
Journal
IEEE 56th Annual Conference on Decision and Control (CDC)
Publisher
Institute of Electrical and Electronics Engineers (IEEE)
Citation
Zhou, Datong P. et al. "How peer effects influence energy consumption." IEEE 56th Annual Conference on Decision and Control (CDC), December 2017, Melbourne, Australia, Institute of Electrical and Electronics Engineers, January 2018. © 2017 IEEE
Version
Original manuscript
Abstract
This paper analyzes the impact of peer effects on electricity consumption of a network of rational, utility-maximizing users. Users derive utility from consuming electricity as well as consuming less energy than their neighbors. However, a disutility is incurred for consuming more than their neighbors. To maximize the profit of the load-serving entity that provides electricity to such users, we develop a two-stage game-theoretic model, where the entity sets the prices in the first stage. In the second stage, consumers decide on their demand in response to the observed price set in the first stage so as to maximize their utility. To this end, we derive theoretical statements under which such peer effects reduce aggregate user consumption. Further, we obtain expressions for the resulting electricity consumption and profit of the load serving entity for the case of perfect price discrimination and a single price under complete information, and approximations under incomplete information. Simulations suggest that exposing only a selected subset of all users to peer effects maximizes the entity's profit.
MIT Department
Massachusetts Institute of Technology. Laboratory for Information and Decision Systems
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1109/cdc.2017.8264229
