How peer effects influence energy consumption
Author(s)Zhou, Datong P.; Roozbehani, Mardavij; Dahleh, Munther A; Tomlin, Claire J.
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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.
DepartmentMassachusetts Institute of Technology. Laboratory for Information and Decision Systems
IEEE 56th Annual Conference on Decision and Control (CDC)
Institute of Electrical and Electronics Engineers (IEEE)
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