Ambiguity aversion and energy saving behaviour: the impact of (non-)monetary interventions

Climate change adaptation is urgent, yet there’s a disconnect between needed support and actual actions. One challenge is that the results of climate-friendly actions are not always immediately visible or measurable, making people unsure about their effectiveness. This project, aims to answer the following questions: how can we encourage energy-saving behaviours even when people are unsure about their peers’ actions? Are there effective communication strategies to address collective risk and promote pro-environmental choices?

The project examines how individuals engage in energy-saving activities when uncertain about others’ energy-saving engagements. Hence, the efficacy of their decisions, at the aggregate level, becomes uncertain. It uses a “collective risk social problem” model, which captures the tension between personal and societal benefits. In this context, this could mean that one person’s energy consumption impacts their outcomes and those of others (e.g., through resource depletion or environmental consequences).

In the experiment, individuals allocate budgets for home energy efficiency improvements to reduce carbon emissions. Reducing emissions is achieved if everyone contributes at least 50% of their budget. Achieving the goal benefits everyone, regardless of their contribution size. Each person knows the impact of their decision, but the overall success depends on others’ decisions. The experiment also introduces behavioural and monetary incentives to encourage higher emission reduction and measure how people perceive the effectiveness of their actions. It ultimately tests which incentives lead to higher reduction and whether people are more likely to engage in energy-efficient actions when they do not know what others are doing. The project holds significant potential for shaping energy-saving campaigns, policy design, and interventions.