NDLI: Price-taker bidding strategy based on Mental Accounting

Content Provider	IEEE Xplore Digital Library
Author	Quan Lu Rao Liu Weidong Li Yaguang Wu
Copyright Year	2008
Description	Author affiliation: Dept. of Electr. & Electron. Eng., Dalian Univ. of Technol., Dalian (Quan Lu; Rao Liu; Weidong Li)
Abstract	Using the concept of ldquomental accounting, MArdquo of behavioral economics, the paper analyses the psychology of GenCos when making a risk bidding decision. Based on the result of analysis, a novel risk decision-making framework is developed to help the price-taker GenCos obtain their satisfied step-wise bidding curves in a pay-as-bid auction. In this framework, the total generation of a GenCo is divided into three separate mental accounts and each has its own independent intent: the first is used to avoid the shut-down loss, the second is used to gain the normal profits, and the last is used to gain the excess profits. In each mental account, basic risk preference, the influence of expected profit goal, and the potential loss from the failure of bids are taken into consideration simultaneously. At last, illustrative example shows the results this framework yields are consistent with the real bidding behaviors of GenCos.
Starting Page	1
Ending Page	6
File Size	171723
Page Count	6
File Format	PDF
ISBN	9781424417056
DOI	10.1109/ICIT.2008.4608574
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2008-04-21
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Power markets Gain Economics Decision making Psychology Electric potential Pricing tacit collusion Bidding Strategy electricity market price spikes
Content Type	Text
Resource Type	Article

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