Educación

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IEEE TRANSACTIONS ON EDUCATION

1

Experimental Economics for Teaching the
Functioning of Electricity Markets
Jessica Y. Guevara-Cedeño, Member, IEEE, Rodrigo Palma-Behnke, Senior Member, IEEE, and Rosa Uribe

Abstract—In the field of electricitymarkets, the development of
training tools for engineers has been extremely useful. A novel experimental economics approach based on a computational Web
platform of an electricity market is proposed here for the practical teaching of electrical engineering students. The approach is
designed to diminish the gap that exists between theory and practice in this field, through a methodologicalstrategy for teaching/
learning called “simulation.” In the proposed simulation exercise,
groups of students operate as market agents and have the freedom
to create their own strategies. Additionally, a theoretical model
and a specific simulation tool are used for the evaluation of the
proposed strategies. The test system is based on the market structure of the Chilean wholesale electricity marketand was tested on
student groups at two universities. Based on the students’ performance, the strategic behavior of agents and their impact on market
price evolution are described and analyzed. Student assessment
supports the conclusion that the proposed experimental economics
framework offers a useful mechanism in student practical work for
understanding and explaining the observedphenomena.
Index Terms—Education, electricity markets, experimental
economics, market behavior, simulation tool, training.

I. INTRODUCTION

T

HE ELECTRICITY sector has experienced huge changes
since the 1980s. At that time, the focus was on introducing
competition at the generation and supply level. Since then, there
have been multiple studies of appropriate designs for electricity
marketsand their specific features in every region or country.
Likewise, there have been efforts to improve the way in which
the functioning of electricity markets is taught, as these are updated and new tools are developed.
Currently, efforts to reform engineering education based
on new definitions of competencies in the US and Europe are
having an impact in Latin America. Various Power Engineeringcurricula in different countries have therefore incorporated new
courses or adapted existing course content to include topics
having to do with electricity markets [1]. This is the case at the

Manuscript received December 06, 2011; accepted February 23, 2012.
This work was supported in part by Fondecyt Grant #1080668 and
IFARHU-SENACYT, Panamá.
J. Y. Guevara-Cedeño is with the Department ofElectrical Engineering,
Technological University of Panama, Panama City 0819-07289, Panama
(e-mail: jessica.guevara@utp.ac.pa).
R. Palma-Behnke and R. Uribe are with the Center of Energy, Faculty of Mathematical and Physical Sciences, School of Engineering,
University of Chile (CMM, ISCI, DIE), Santiago 412-3, Chile (e-mail:
rodpalma@cec.uchile.cl).
Color versions of one or more of thefigures in this paper are available online
at http://ieeexplore.ieee.org.
Digital Object Identifier 10.1109/TE.2012.2189886

Engineering School of the University of Chile, Santiago, Chile,
where a more flexible curriculum based on general and specific
competencies has been implemented [2].
From an academic point of view, it is crucial to offer postgraduate students training in subjects such as thefunction of
electricity markets or the technical and economic analysis of
power systems, which provide practical competencies in the operation of electricity markets. Their purpose would be to develop practical and theoretical skills highly valued in professional training in electricity markets [3], [4].
The availability of software tools in the field of electricity
markets is much more...