Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191513
Year of Publication: 
2018
Series/Report no.: 
IRENE Working Paper No. 18-04
Publisher: 
University of Neuchâtel, Institute of Economic Research (IRENE), Neuchâtel
Abstract: 
This paper studies the role of imperfect information and attentional biases in the context of energy efficiency investments in rented properties and associated split incentives. We design a multiple price list experiment representing owners' decision to replace the central heating appliance, and employ both within-subject information disclosure and betweensubject variation in information provision to quantify how tenants trade-off energy efficiency and rent increases. A set of quantile regressions suggests that information on expected energy bills reduction induces around 30% of tenants to equate financial savings and acceptable rent increase. Around 20% of tenants oppose rent increase and do not respond to information, whereas tenants' valuation in the upper tail of the distribution exceeds financial savings, presumably on account of pro-environmental motives. By contrast, information on energy bills variability dampens acceptable rent increase. Our results highlight the importance of realistic ex-ante estimates of financial savings associated with energy efficiency investments.
Subjects: 
Market failures
Information
Split incentives
Energy efficiency
Environmental policy
Rented properties
Economic experiments
Multiple price lists
JEL: 
Q4
R31
Q5
H23
Document Type: 
Working Paper

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