Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333731 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12185
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
We leverage quasi-experimental variation to study how group size influences free-riding behavior within a high-expense environment. When buildings lack apartment-specific heat meters, tenants use simple heuristics to split a common bill. We estimate that the staggered rollout of a corrective technology, "submetering," reduces heating expenses by 17%, on average. Machine learning techniques uncover substantial heterogeneity, consistent with strategic exit of free-riders and coordination failures in large buildings. Tenants in smaller buildings show minimal response and are surprisingly price elastic. Only a minority of households exploits the free-riding incentives. Targeted submetering policies can be much more cost-effective than universal mandates.
Subjects: 
free-riding
submetering
individual billing
heating energy
tragedy of the commons
welfare
JEL: 
D62
Q41
Q52
Document Type: 
Working Paper
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