Financial planning is undoubtedly a useful tool to enhance an efficiency of both market sides and thus efficiency of the whole market. However, it is essential to realize that planning can fail in the face of a reliance on a neoclassical cost-benefit analysis while ignoring findings of the behavioral economics. Electricity markets, where despite recent tendencies to make such markets more competitive, consumers seem not to switch their tariffs as much as standard analysis would suggest. It appears that switching decisions are strongly influenced by several psychological factors like status-quo, time inconsistency and mental accounting. This paper presents a review of works on mentioned factors with aim to provide planners on the supply side with a theoretical background how to incorporate such factors into their cost-benefit analysis. By doing so, they can not only make the market more effective but will also improve welfare of their consumers.
Citation: Zíka, V., & Koblovský, P. Behavioral economics and customers’ decisions at energy market (2016). Conference paper.