Playing the game of heating systems: the case of Romania

Although theoretically the individual decision of buying heating systems is expected to be an efficient choice, the problem of social sub-optimality must be considered. This paper models and empirically investigates, from the point of view of game theory and rational choice perspective, the distinction between individual and collective action, how the former can cause the failure of the latter. Individuals still choose to buy individual heating systems without being aware that a better solution is the investment in the modernization of centralized heating systems. Although it has a lot of beneficial aspects, as comfort or efficiency, the choice of individual boilers has important social negative externalities, such as neighborhood pollution. Therefore, the main inquiry is how public authorities can contribute setting the incentives to transpose individual rationality to the social level. The formal and game theoretical results show that if enough people cooperate in order to modernize district heating systems the both individual and social costs can be lower than in the case of individual heating boilers.