Behavioral Economics Applied to Energy Demand Analysis: A Foundation

US DOE, Energy Information Administration
http://www.eia.gov/analysis/studies/demand/economicbehavior/

Neoclassical economics has shaped our understanding of human behavior for several decades. While still an important starting point for economic studies, neoclassical frameworks have generally imposed strong assumptions, for example regarding utility maximization, information, and foresight, while treating consumer preferences as given or external to the framework. In real life, however, such strong assumptions tend to be less than fully valid. Behavioral economics refers to the study and formalizing of theories regarding deviations from traditionally-modeled economic decision-making in the behavior of individuals. The U.S. Energy Information Administration (EIA) has an interest in behavioral economics as one influence on energy demand…

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