Prospect Theory-Based Optimal Bidding Model of a Prosumer in the Power Market

Wang, Ying; Zhang, Ling; Ding, Qia; Zhang, Kaifeng

doi:10.1109/access.2020.3011594

Cited by 12 publications

(5 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…5 b, the bidder's bid decreases with revenue attitude α . These results have been confirmed in other industries (e.g., the electricity market 33 ). Figure 5 c shows that the optimal bid strategy in the SDPM is an "inverse S" curve, and the cost-disadvantaged bidder is similar to the standard model ( ).…”

Section: Numerical Simulationsupporting

confidence: 67%

Boundedly rational bidding decision for land auctions during the transformation of real estate markets

Liao,

Zhang,

Tan

et al. 2023

Sci Rep

View full text Add to dashboard Cite

Real estate developers in China exhibit different boundedly rational behaviors when bidding in different land auction formats, resulting in deviation from fully rational bidding, and the transformation of China’s real estate industry has intensified this deviation. To address this problem, this study establishes a reference utility model and a subjective decision probability model under the framework of incomplete information game to characterize developers’ utility distortion and winning probability distortion in open-bid auctions and sealed-bid auctions for land, respectively. The results show that the deviation between bounded rational bidding and fully rational bidding increases as developer competition intensifies. The equilibrium bidding of cost-disadvantaged developers in the boundedly rational model deviates less from the standard model. Moreover, in sealed-bid auctions, the "hiding degree" of cost-advantaged developers is greater, showing size effects, while the bids in open-bid auctions are more complex and affected by market conditions and developers’ risk preferences. Thus, this study characterizes boundedly rational bidding in land auctions and interprets the deviation from fully rational bidding, which can provide a more real basis for land auction mechanism design.

show abstract

Section: Numerical Simulationsupporting

confidence: 67%

Boundedly rational bidding decision for land auctions during the transformation of real estate markets

Liao,

Zhang,

Tan

et al. 2023

Sci Rep

View full text Add to dashboard Cite

show abstract

“…To support consumers' decision on whether or not to be involved in LEMs, researchers employ prospect theory, which describes the way in which decisionmakers evaluate and decide upon their actions under risky or uncertain conditions by considering their psychological perceptions and risk preferences [2]. In [24], authors developed a bidding model for a power market based on prospect theory while fully accounting for irrational consumer behaviour and personal preferences. In [25], authors refine consumer behaviour models with sigmoidal functions to obtain maximum utility, and in [26] authors analyze how behavioural economics impact the demand response model, showing that preferences can have a profound effect on demand response and it makes sense to appeal to them when procuring demand response.…”

Section: Related Workmentioning

confidence: 99%

Design of a Prosumer-Centric Local Energy Market: An Approach Based on Prospect Theory

Andriopoulos,

Plakas,

Birbas

et al. 2024

IEEE Access

View full text Add to dashboard Cite

The energy sector is undergoing a transformative shift, driven by advancements in Distributed Energy Resources (DERs), the digitization of the energy supply chain and decarbonization policy objectives across the world. This paradigm shift has led to the emergence of Local Energy Markets (LEMs), which enable small-scale prosumers to actively participate in the energy market, trade power, and leverage their flexible resources. To ensure the success and acceptance of LEMs, this paper proposes a cooperative game-theoretic approach that fosters prosumer engagement and fair profit allocation. We utilize prospect theory from behavioural economics to examine the decision-making process of prosumers and incorporate their preferences for changes in wealth status. By adopting a cooperative game structure, prosumers can pool their resources, reduce transaction costs, and enhance data utilization. The paper introduces a novel pricing algorithm inspired by prospect theory that incentivizes prosumer participation and accounts for the uncertainty involved in LEM operations. Additionally, a computationally efficient method for profit allocation based on the variation of the Shapley value is proposed to ensure scheme stability. A use case evaluation is conducted on a real-world low-voltage network, demonstrating the effectiveness of the proposed approach in terms of economic efficiency and market characteristics. The results highlight the benefits of the consumer-centric LEM, including improved local trading dynamics, fair profit distribution, and enhanced grid stability. Overall, this research contributes to the design and development of LEMs that prioritize prosumer engagement, community cooperation, financial inclusion and democratization of the energy market.

show abstract

“…In the wholesale market, retail companies usually have options to bid on a decremental price-quantity curve, which is divided into several price-quantity segments [46]. Figure 2a,b illustrate the bidding curves with 1-segment and 3-segment bidding rules, respectively.…”

Section: Market-clearing Mechanismmentioning

confidence: 99%

MRL-Based Model for Diverse Bidding Decision-Makings of Power Retail Company in the Wholesale Electricity Market of China

Wang

Liu

Yuan

et al. 2023

Axioms

Self Cite

View full text Add to dashboard Cite

Power retail companies in the electricity market make profits through buying and selling power energy in the wholesale and retail markets, respectively. Traditionally, they are assumed to bid in the wholesale market with the same objective, i.e., maximize the profit. This paper proposes a multiagent reinforcement learning (MRL)-based model to simulate the diverse bidding decision-making concerning various operation objectives and the profit-sharing modes of power retail companies in China’s wholesale electricity market, which contributes to a more realistic modeling and simulation of the retail companies. Specifically, three types of operation objectives and five types of profit-sharing modes are mathematically formulated. After that, a complete electricity market optimization model is established, and a case study with 30 retail companies is carried out. The simulation results show that the proposed method can effectively model the diverse bidding decision-making of the power retail companies, which can further assist their decision-making and further contribute to the analysis and simulations of the electricity market.

show abstract

Prospect Theory-Based Optimal Bidding Model of a Prosumer in the Power Market

Cited by 12 publications

References 22 publications

Boundedly rational bidding decision for land auctions during the transformation of real estate markets

Boundedly rational bidding decision for land auctions during the transformation of real estate markets

Design of a Prosumer-Centric Local Energy Market: An Approach Based on Prospect Theory

MRL-Based Model for Diverse Bidding Decision-Makings of Power Retail Company in the Wholesale Electricity Market of China

Contact Info

Product

Resources

About