Mental accounting theory‐based bounded‐rationality trading strategy of prosumers in transactive energy market

• Published in: IET generation, transmission & distribution Vol. 17; no. 12; pp. 2876 - 2893
• Main Authors: Jing, Xinyi, Song, Meng, Gao, Ciwei, Yao, Yunting, Cai, Yunfeng
• Format: Journal Article
• Language: English
• Published: Wiley 01.06.2023
• Subjects: mental accounting theory; prosumers; trading decision‐making; transactive energy market
• ISSN: 1751-8687; 1751-8695
• DOI: 10.1049/gtd2.12864

In the transactive energy market (TEM), prosumers are assumed to be rational. However, prosumers’ trading behaviours are affected by many factors (e.g. social relations, personal preferences, and habits). Their trading demands vary in benefits, comfort levels, and environmental consciousness, which show bounded rationality. Accordingly, this paper introduces the mental accounting theory to develop a trading decision‐making method by characterizing prosumers’ actual trading behaviours. It quantified prosumers’ motivations and psychological changes by the risk attitude and subjective value models in the process of multi‐account management. The updating rules of trading decisions and multi‐round bidding market mechanism are also designed to improve the social welfare and market efficiency. Case studies demonstrate that the proposed method can make prosumers trade in TEM under their actual intentions and bounded‐rationality. And the market mechanism can help to increase social welfare and market efficiency. This paper introduces the mental accounting theory to develop a trading decision‐making method to characterize the real trading behaviours of prosumers. It extensively considers prosumers’ motivations and psychological changes in the trading process, which are quantified by the risk attitude and subjective value models of the multi‐account management. The updating rules of trading decisions and multi‐round bidding market mechanism are also designed to improve the social welfare and market efficiency. Case studies demonstrate that the proposed method can make prosumers trade with others in accordance with their actual bounded‐rationality intentions. And the market mechanism can help to increase social welfare and market efficiency.