Christina McGranaghan, PhD, Assistant Professor of Applied Economics at the University of Delaware, will present the EEEP Seminar Series, “Taking a Load Off: Experimental Evidence of Preferences for Control with an Application to Residential Electricity Demand” on April 22, 2026.
Abstract:
The rising share of renewable electricity generation has led to an increased focus on demand-side mechanisms to balance the grid. For example, Direct Load Control (DLC) contracts allow utilities to curtail the electricity use of participating households at times of system stress. Christina McGranaghan uses a novel experimental design to show that intrinsic preferences for control can significantly impact the rewards required to encourage consumers to participate in such contracts. In particular, McGranaghan tests for the existence, magnitude, and attributes of control premia in a lab environment which mimics basic features of the DLC context. McGranaghan finds that participants, on average, exhibit a control premium of 9-32% above the instrumental value of the decision. This premium responds to both the probability and stakes of ceding control. There is limited evidence for the existence of an endowment effect with respect to control. Participants stated motivations underlying their decisions are consistent with an inflation of (perceived) option value that cannot be explained by probability weighting.
Bio:
Christina McGranaghan is an Assistant Professor of Applied Economics at the University of Delaware. She is an experimental economist studying decision making under risk and uncertainty. Her applied work uses experiments to explore decision making in the context of flood risk and unfamiliar environmental goods. She received her PhD in Applied Economics at Cornell University in 2020.