This paper discusses theories that can explain the zig-zags of oil prices in general and in particular the recent jump. More precisely, the following explanations are discussed: Homo oeconomicus (pure profit maximization if demand is dynamic and convex), price reaction function (price increases...

This paper investigates consumers' decisions about a (single and lumpy) conservation project accounting for uncertainty and expectations (rational versus myopic). Rational expectations take into account that the profitability of individual conservation measures will affect fuel prices (here set...