Applying pervasive technologies to create economic incentives that alter consumer behavior

ABSTRACT

Economic incentives are a powerful way of shaping consumer behavior towards more commercially efficient and environmentally sustainable patterns. In this paper, we explore the idea of combining pervasive computing techniques with electronic payment systems to create activity-based micro-incentives. Users who consume additional resources by e.g., occupying an air-conditioned space instead of a normal space are levied additional micro-payments. In an alternative approach, consumers who choose to save resources are rewarded with micro-rebates off the price of a service. As a result, the cost of using a service corresponds more closely with the resources used, leading market mechanisms to allocate resources efficiently. A key challenge is designing incentive mechanisms that alter consumer behavior in the desired fashion. We introduce four incentive models, and present evaluation results suggesting that consumers make different decisions depending on which model is used.

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INDEX TERMS

Primary Classification:
  H. Information Systems
  H.1 MODELS AND PRINCIPLES
      H.1.2 User/Machine Systems

General Terms:
Design, Economics, Experimentation, Human Factors

Keywords:
activity-based micro-pricing, economic incentives, micropayments, mobile payment, persuasive technology, virtual currency