“I take the green one”: The choice of regional green electricity contracts in the light of regional and environmental identity

Abstract

Most studies that focus on the choice of electricity contracts rely on the concept of utility-maximizing agents. However, since electricity is a low-involvement good and choosing an electricity contract is cognitively demanding, these studies may be misguided. Therefore, we investigate whether the choice of an electricity contract is instead driven by decision heuristics. Based on a stated choice experiment on electricity contracts, we find a willingness to pay for regional and green electricity that is causally affected by environmental and regional identity. Moreover, we find that about 40% of electricity contract choices are guided by the heuristic of choosing the greenest electricity mix. Decision heuristics based on regional contract characteristics occur less frequently. However, their use increases significantly when regional identity is salient. Thus, environmental and regional identity is a channel that can be used by policy makers and electricity providers for targeted marketing or information campaigns to increase demand for regional electricity products.