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How punishment and reward increase customer acceptance of demand response in the energy industry
ISSN
0065-0668
Type
conference paper
Date Issued
2014-08-04
Author(s)
Abstract
Following national and international policy guidelines for energy efficiency and in order to optimize supply and demand, electric utilities introduce demand response programs (DR). However firms struggle how to best help consumers to accept these programs. In the light of recent theories of decision-making that favour heuristic over information-based decision strategies, the paper at hand investigates the role of punishment and reward for consumer acceptance of DR. We find that although electric utilities design DR programs mostly based on rewards (assumingly in fear of consumer loyalty), DR regimes based on punishment appear more effective, without jeopardizing loyalty of consumers. Thus, in the light of prospect theory our data indicates that if firms help customers to avoid a loss in form of a punishment this has a larger positive impact on the intended behaviour than if firms help customers to gain a reward. Implications for practice and especially a demand-based view on environmental management apply.
Language
English
Keywords
customer acceptance
punishment/ reward
loyalty
HSG Classification
contribution to scientific community
Refereed
No
Book title
Academy of Management Annual Meeting Proceedings. 2014
Publisher
Academy of Management
Start page
1
Event Title
74th Academy of Management Annual Meeting (AOM) 2014 "The Power of Words"
Event Location
Philadelphia, PA
Event Date
01.-05.08.2014
Subject(s)
Division(s)
Eprints ID
230303