Consideration, Design, and Energy Policy

Iowa State University, Ames IA

Investigators

Abstract

The objective of this project is to model how consumers make purchasing decisions in a world that includes manufacturers and government policy. The model is an engineering design tool that will help automobile designers understand their market in the context of the social, public and physical environments. Psychology and marketing researchers have improved models of consumer choice by modeling a two-stage decision process in which consumers first use screen their purchase options to narrow their choices to a consideration set, and then select a final product from this set. This work incorporates screening and consideration sets into models of optimal product portfolio design decisions and energy policy decisions. Simulation experiments test the hypothesis that using the "consider-then-choose" choice model improves enterprise-level model performance across a variety of scenarios. The project a government-industry-academic workshop, a policy white paper, a session at a technical engineering design conference, and peer-reviewed publications. This work enhances currently-used models of consumer choice in which every alternative is evaluated via continuous trade-offs. For example, ignoring non-compensatory consideration behavior may result in poor design decisions for alternate fuel vehicles (AFVs), leading to increased CAFE compliance costs and missed opportunities for greenhouse gas reductions. Automakers must design AFVs acceptable for all customers, not just early adopters, and enhanced models of consumer decisions are an important part of meeting this challenge. Consideration rules may restrict the potential market for AFVs, perhaps due to size, cost, or brand alignment. Forecasts of transportation energy policy impacts, particularly the effectives of purchase incentives, are incomplete without including consumer consideration rules. Such policy can be more effective when it broadens what individuals see as viable options for personal transportation.