Mental accounting

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Mental accounting ( English Mental Accounting ) is a theory of a systematic cognition problem and object of behavioral economics (English Behavioral Economics ). According to this theory, people divide financial transactions into mental accounts and treat them differently depending on the account. This leads to wrong decisions. The theory goes back to the work of the American economist Richard Thaler from 1980 and 1985.

Account creation

The (fictitious) accounts that people unconsciously create can be created according to a wide variety of categories. Examples would be B. "Gifts", "Summer vacation-related expenses", "Share price gain". This account creation helps to keep track of income and expenses.

Problems

Costs irrelevant to the decision

Costs that are irrelevant to the decision, such as sunk costs, must not be included in the rational decision-making process. The mental account formation, however, may prevent the recognition that it is such.

Thaler describes an empirical experiment in which the test subjects want to go to the theater and the ticket costs 10 dollars. In the experiment, the test subjects are told that they are at the box office and have lost the ticket and would have to buy it again. 56% are not ready to do so. Mentally, these 10 dollars are added to the “Theater ticket purchase” account. At $ 20, the card costs more than the test subjects are worth attending the theater. Another subgroup of experiment participants was supposed to buy the ticket for $ 10 at the box office. They were then told that they had lost the $ 10 cash and had to pay for the card with other money. Here, 88% decided to buy the card. Mentally, these 10 dollars are added to the "loss of cash" account. The mental price of the ticket remained at $ 10.

Loss aversion

According to prospect theory, people value the potential loss of money significantly higher than the chance of profit. This loss aversion leads to a distortion of the status quo . Profits and losses are recorded in different mental accounts. Only then can this distortion occur at all.

Missing "clearing" of these accounts

Rational decisions on interdependent issues need to be considered together. This can be prevented by dividing it into mental accounts.

literature

  • Richard Thaler: Towards a positive theory of consumer choice (1980) Journal of Economic Behavior and Organization, 1, pp. 39-60
  • Richard Thaler: Mental accounting and consumer choice (1985) Marketing Science, 4, pages 199-214.
  • Richard Thaler: Saving, fungibility and mental accounts (1990) Journal of Economic Perspectives, 4, pages 193-205.
  • Richard Thaler: Mental accounting matters (1999) Journal of Behavioral Decision Making, 12 (3), pages 183-206.

Individual evidence

  1. ^ Richard Thaler : Towards a positive theory of consumer choice. In: Journal of Economic Behavior and Organization , Volume 1, No. 1, March 1980, pp. 39-60 (English).
  2. ^ Richard Thaler: Mental Accounting and Consumer Choice. In: Marketing Science , Vol. 4, No. 3, August 1985, pp. 199-214 (English).
  3. ^ Richard Thaler: Mental accounting matters (1999) Journal of Behavioral Decision Making, 12 (3), page 193 ff.