Demand Response Model Considering Loss Aversion Concept

In this paper, a demand response (DR) model has been proposed based on the loss aversion concept. Loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Meanwhile, DR programs are classified into two main clusters: incentive-based programs (participated customers receive incentives) and price-based programs (participated customers in some periods are faced by high electricity price which is interpreted as loss for them). Regarding this matter, loss aversion concept is completely fitted for including in the DR model. MATLAB software is used to implement the proposed DR model. The data is extracted from New England ISO. Two different DR programs are considered for the numerical study, with and without consideration of the loss aversion. It is shown that the behavioral characteristics of the customers, loss-aversion in this case, is indispensable in the selection of the proper program.