The Costs and Benefits of "Strangers": Why Mixed Communities Are Better

Much of the literature on diversity assumes that individuals have an exogenous "taste for discrimination". In contrast with this approach, we build a model where preferences over the nature of one's community are derived indirectly, and arise because the composition of the community determines the behavior of its members. This allows us to gain a far deeper understanding of the forces that underpin the desirability of diversity or homogeneity within communities. Our main contribution is to show that there are always counteracting forces (heterogeneity involves both costs and benefits), and that, although people prefer to live in communities where their type is majoritarian, they always benefit from having some heterogeneity in the composition of their community.heterogeneity, social interactions, value of information, complementarities.

A Collection of Essays on Electric Grid Operations: Optimizing Energy Storage and Enhancing the Effect of Social Comparisons.

Every year, a significant portion of U.S. energy production is wasted through transmission, heat losses, and inefficient technology, translating into significant costs to individual consumers and businesses. This dissertation explores various ways of improving the grid operations related to energy storage. Storage allows for smoothing production avoiding the costly peaking plants. However, scalable energy storage technologies are expensive and have significant conversion losses in both the storing and withdrawing processes. The first essay considers the problem of locating storage facilities in an electric grid. Due to transmission losses, the location of storage technology on the grid affects its economic value. We consider a trade-off between locating storage closer to the generation unit, increasing flexibility of the storage unit, or closer to the demand hub, reducing transmission losses and study how changes in system parameters will affect this trade-off. We conclude that current system parameters greatly favor storage investments closer to the demand hub, due to lesser transmission losses, and minimal benefit of pooling. The second essay considers the choice of storage technology. There exist a number of storage technologies differing in investment costs per unit capacity and conversion efficiencies. One of the critical trade-offs is between investing in technology with greater conversion efficiency, incurring greater fixed costs or investing in technology with low efficiency, incurring lower fixed cost but greater variable costs. We show that investing in a portfolio of technologies may perform better than choosing a single technology, while this benefit of diversification is decreasing in the number of technologies invested. The third essay deals with behavioural energy efficiency. Opower, a technology company has recently shown that comparing energy consumptions of households to their peers can motivate consumers to significantly reduce their energy usage through peer pressure. Their Home Energy Reports (HER) program has documented up to 3% reduction in energy consumption of consumers across the spectrum. We model the effects of these social incentives against more standard investment incentives. We observe that, including both types of incentives can reduce demand consumption when compared to the sum of the reduction by applying each of the incentives separately, dramatically.PhDBusiness AdministrationUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/110439/1/sssandy_1.pd