10.6) Realistic Behaviour

So far, the implemented behaviour implies rational behaviour and complete information for all house owners, two things we do know do not happen in reality. We tried to account for the incomplete information to a certain extent, as only agents which had a think about PV actually sit down and calculate the costs and benefits of an PV installation. But the accounting algorithm is way too simple as it does not discount future benefits or in different terms, overvalue present investment compared to the future. This is standard technique in economy, usually with the assumption that a rational actor would discount future returns (or account present investment) according to a comparable market interest. However, from many studies we know that people discount over-proportional and in that sense act irrational. We would like to include such a discounting factor in the cost benefit analysis in our model. The easiest way to do this is to increase the total costs of the PV installation by a accounting factor (you could as well discount future returns with the same result). Again this is a major change in your model, so save it as a new version.

Go to the calculate-balance-and-decide procedure and multiply the total costs by an accounting factor AF. We define AF as a local variable and then use two global variables to define it. One is the interest rate which we need to define as a slider in the interface (0-0.1, increase of 0.005). The other global variable is the expected PV lifetime which we use to exponentiate (1 + interest-rate). Change the two lines in the code accordingly:

let AF (1 + interest-rate) ^ PV-lifetime
let total-cost (PV-cost-per-m2 - subsidies-per-m2) * roof-size * AF