Don’t know? Don’t care? What a price experiment tells us about natural gas consumption.

Abstract

We examine a large randomized field experiment which exogeneouslyvaries residential natural gas prices. All participating households areequipped with in-house devices that provide price information at thepress of a button. Nevertheless, we find overwhelming evidence thathouseholds do not know the price. A lack of price information is aserious threat to the identification of causal effects. Households whodo not know their price cannot react to it. In line with this finding,we provide strong evidence that households do not react to exogenous,monthly price variations between−15.4% and +17.9% in the year longtrial. Overall, our findings suggest that the hypothesis of full informa-tion must be tested carefully.