A Bounded Rationality Model of Private Energy Investment Decisions
20 Pages Posted: 7 Aug 2006
Date Written: August 3, 2006
The future evolution of energy demand in cities has a major influence on energy market size, pricing, competition level, consumer relations, overall CO2 emissions, and supply security. This paper presents a bounded rational decision model which can be used to estimate this evolution. It starts with an overview over barriers to energy efficiency investment followed by an introduction to bounded rationality decision models. It further presents a concept which can be used to parameterize this model by introducing a typology of representative actors who face representative decision tasks. The decision outcomes are determined and discussed.
Keywords: bounded rationality, energy, investment decision, model
JEL Classification: D10, Q41
Suggested Citation: Suggested Citation