The aim of this paper is to provide experimental evidence for a water consumption bias when households face a complex tariff scheme. To obtain an objective measure of this bias, we design an incentivized laboratory experiment where participants choose a water consumption level under different tariffs schemes, namely, a Constant Block Rate (CBR) and an Increasing Block Rate (IBR). Our first result is that, as expected, the individual consumption bias is positive, indicating an average consumption level above the optimal level. Second, under a progressive tariff scheme, the consumption bias is lower than that under the CBR, which demonstrates the efficiency of price incentives in terms of water conservation. A third important result is that the consumption bias is significantly reduced by providing information recall about marginal prices to participants under the IBR tariff scheme.
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