"Smart Rationing: Designing Shortage Mechanisms for Extreme Events" 

joint with Mar Reguant, Mayra Wagner, and Dorian Weber

Abstract: 

As shortages of resources like water and electricity due to extreme weather events become more frequent, high prices alone often fail to curb demand, making non-price interventions necessary. Using smart meters, we propose a partial rationing policy for residential households to avoid blackouts. We find that partial rationing policies can be equivalent to large rolling blackouts, even when partial rationing is generous. Additionally, due to selection, partial rationing policies reduce the number of households effectively impacted by the rationing event, even without losing power. We conclude with a discussion of open questions about the design of optimal rationing policies.