Mental Accounting Matters (1999)
| Venue: | JOURNAL OF BEHAVIORAL DECISION MAKING J. BEHAV. DEC. MAKING, 12: 183~206 (1999) |
| Citations: | 378 - 6 self |
BibTeX
@MISC{Thaler99mentalaccounting,
author = {H. Thaler},
title = { Mental Accounting Matters},
year = {1999}
}
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Abstract
Mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities. Making use of research on this topic over the past decade, this paper summarizes the current state of our knowledge about how people engage in mental accounting activities. Three components of mental accounting receive the most attention. This first captures how outcomes are perceived and experienced, and how decisions are made and subsequently evaluated. The accounting system provides the inputs to be both ex ante and ex post cost-benefit analyses. A second component of mental accounting involves the assignment of activities to specific accounts. Both the sources and uses of funds are labeled in real as well as in mental accounting systems. Expenditures are grouped into categories (housing, food, etc.) and spending is sometimes constrained by implicit or explicit budgets. The third component of mental accounting concerns the frequency with which accounts are evaluated and 'choice bracketing'. Accounts can be balanced daily,
Keyphrases
mental accounting mental accounting matter second component financial activity accounting system current state specific account explicit budget mental accounting activity cognitive operation mental accounting system ex post cost-benefit analysis third component mental accounting concern past decade
