Positive status quo/ opt-out cost
Posted: Mon Jun 08, 2026 7:47 pm
Dear Professor Bliemer,
I am working on a choice experiment regarding tariff design in electricity networks. People can choose between 2 alternative tariff designs (alt1 and alt2) and a status quo tariff design. The cost attribute in the design represents the fixed cost on a household's electricity bill.
The alternative tariff designs are associated with a lower fixed cost on the electricity bill. In reality, the fixed cost associated with the status quo design is not zero. If no tariff reform takes place (i.e., status quo in terms of tariff design), the fixed cost will increase because of costly grid investments by the distribution grid operator. Because I want my choice experiment to represent reality as accurately as possible, I am considering ways to introduce a positive status quo cost.
Currently, I explain to people, in the text before the choice tasks are shown, that the future fixed cost will be 'higher' than today's under the present tariff regime, and that changes in fixed costs should be interpreted relative to this 'higher' fixed cost. On the choice card itself, this is represented by negative monetary values for alt1 & alt2 and €0 for the SQ alternative. However, qualitative pretesting has revealed that people do not take into account that the fixed cost will increase in the future in the case of no tariff reform. Therefore, I need a different approach.
To what extent is it possible to introduce the SQ monetary attribute level as a positive baseline cost, and for the cost levels of alt1 & alt2 to deviate from this positive baseline? For example, the SQ cost level is set to €100 (in the design it remains the baseline level 0) and the cost levels of the two alternatives are subtracted from this baseline level. Thus, when alt1.cost = €10 and alt2.cost = €20, I show alt1.cost = 90 and alt2.cost = 80. What implications does this idea have/ are there better ways to introduce a positive SQ cost.
And how about a positive cost for an 'opt-out' alternative (for a different CE, where an opt-out is more appropriate than a SQ alternative)? The same reasoning as above applies: opting out (i.e., no change in policy) will result in a higher fixed cost on the electricity bill. Again, the cost levels of the non-opt-out alternatives would be subtracted from the opt-out cost level.
Many thanks in advance for your reply.
I am working on a choice experiment regarding tariff design in electricity networks. People can choose between 2 alternative tariff designs (alt1 and alt2) and a status quo tariff design. The cost attribute in the design represents the fixed cost on a household's electricity bill.
The alternative tariff designs are associated with a lower fixed cost on the electricity bill. In reality, the fixed cost associated with the status quo design is not zero. If no tariff reform takes place (i.e., status quo in terms of tariff design), the fixed cost will increase because of costly grid investments by the distribution grid operator. Because I want my choice experiment to represent reality as accurately as possible, I am considering ways to introduce a positive status quo cost.
Currently, I explain to people, in the text before the choice tasks are shown, that the future fixed cost will be 'higher' than today's under the present tariff regime, and that changes in fixed costs should be interpreted relative to this 'higher' fixed cost. On the choice card itself, this is represented by negative monetary values for alt1 & alt2 and €0 for the SQ alternative. However, qualitative pretesting has revealed that people do not take into account that the fixed cost will increase in the future in the case of no tariff reform. Therefore, I need a different approach.
To what extent is it possible to introduce the SQ monetary attribute level as a positive baseline cost, and for the cost levels of alt1 & alt2 to deviate from this positive baseline? For example, the SQ cost level is set to €100 (in the design it remains the baseline level 0) and the cost levels of the two alternatives are subtracted from this baseline level. Thus, when alt1.cost = €10 and alt2.cost = €20, I show alt1.cost = 90 and alt2.cost = 80. What implications does this idea have/ are there better ways to introduce a positive SQ cost.
And how about a positive cost for an 'opt-out' alternative (for a different CE, where an opt-out is more appropriate than a SQ alternative)? The same reasoning as above applies: opting out (i.e., no change in policy) will result in a higher fixed cost on the electricity bill. Again, the cost levels of the non-opt-out alternatives would be subtracted from the opt-out cost level.
Many thanks in advance for your reply.