A game theory based analysis of decision making for green retrofit under different occupancy types

Abstract

Buildings are responsible for almost half of all the energy consumption and greenhouse gas (GHG) emissions in the world. This situation highlights the importance of the green retrofit for existing buildings in reducing the energy consumption and GHG emissions, as emphasized by the academia and improved by the government. Although relevant stakeholders are interested in implementing green retrofit projects, this approach has not been widely pursued by the industry, the reasons of which remain unclear. Therefore, this study aims to reveal the underlying logic by analyzing the behaviors of the building owners and occupiers, who are the direct decision makers in initiating green retrofit at the initial intention phase. Three occupancy scenarios, namely, owner-occupied (baseline scenario), single-occupied, and multi-occupied buildings, are used for the game analysis. The Nash Equilibrium of the game is used to analyze the probable decisions of the owners and occupiers under the last two occupancy scenarios. Results demonstrate that both owners and occupiers are reluctant to retrofit under both scenarios. Nevertheless, the reasons vary under the two scenarios despite the same results obtained. This study clarifies the reasons for the reluctance of the direct decision makers to participate in green retrofit projects. The main reasons include the split incentives between the owners and occupiers, the complex coordination, and the uncertainty of green retrofit. The identified reasons are also beneficial to the policy makers, particularly in their effort to promote green retrofit by considering the requirements of owners and occupiers under the different occupancy types.