Strategic allocation of effort in energy reduction contests

Dr Philomena Bacon, LUMS, Lancaster University

Rent payable on university accommodation often incorporates energy costs, thereby absorbing the risk associated with excessive use by student residents. Such an arrangement is likely to be attractive to students, some of whom are away from home for the first time and unfamiliar with energy budgeting. Energy conservation tournaments, first introduced into UK University campuses in the early Nineties, have widespread appeal to universities keen to save costs on fuel, but typically offer little to students. The effectiveness of promoting energy reductions in terms of moral concerns for the planet, in reducing costs to the university through the `unrewarded’ effort of students, is to-date unknown. This paper attempts to address this, by describing, analysing data from, and testing hypotheses relating to the aims of students who are engaged in carbon-dioxide reduction within, dynamic contests played in their domestic campus setting. Data on electricity consumption is obtained via digital monitoring, over seven semesters for approximately 1900 students, for continuous periods of eight weeks at a time. Feedback on daily carbon-dioxide emissions is given via a dedicated website for all contestants who compete in teams for a number of prizes. The `Tullock Contest’ format is applied and extended in two ways: firstly it becomes a dynamic contest lasting for 56 days; secondly it is repeated for the same cohort the following semester. Other minor contests are nested within the main contest to homogenize effort. We formally test for optimal effort allocation, incentive compatibility, asymmetric information and the effect of these on effort in this unique environment. We find that competitors are ‘encouraged’ by the knowledge that their ranking has improved in the previous week, since this appears to induce a fall in consumption. Similarly, we find that competitors whose ranking has worsened are ‘discouraged’, since their consumption appears to increase. We find that these effects apply throughout the ranking, that is, even competitors who are low down in the ranking appear to be encouraged by improvements. This may be interpreted in terms of over-weighting of the win-probability for competitors low down in the ranking, and may be seen as supporting a form of cumulative prospect theory.