TITLE

Mental Accounting and Consumer Choice

AUTHOR(S)
Thaler, Richard H.
PUB. DATE
January 2008
SOURCE
Marketing Science;Jan/Feb2008, Vol. 27 Issue 1, p15
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
A new model of consumer behavior is developed using a hybrid of cognitive psychology and microeconomics. The development of the model starts with the mental coding of combinations of gains and losses using the prospect theory value function. Then the evaluation of purchases is modeled using the new concept of "transaction utility." The household budgeting process is also incorporated to complete the characterization of mental accounting. Several implications to marketing, particularly in the area of pricing, are developed.
ACCESSION #
31447085

 

Related Articles

  • Consumer choice: between explicit and implicit reference points. Tarnanidis, Theodoros K.; Owusu-Frimpong, Nana; Marciniak, Ruth // Marketing Review;Fall2010, Vol. 10 Issue 3, p269 

    The purpose of this study is to review the literature relating to explicit and implicit reference points in consumer choice, and to bring together, in a constructive way, the main findings that have been advanced. A theoretical approach is followed in order to examine what different authors have...

  • MENTAL ACCOUNTING AND CONSUMER CHOICE. Thaler, Richard // Marketing Science;Summer85, Vol. 4 Issue 3, p199 

    A New Model of consumer behavior is developed using a hybrid of cognitive psychology and microeconomics. The developments of the model starts with the mental coding of combinations of gains and losses using the prospect theory value function. Then the evaluation of purchases is modeled using...

  • REPRESENTING ATTITUDE STRUCTURE: ISSUES AND EVIDENCE. Miniard, Paul W.; Page Jr., Thomas J.; Atwood, April; Rose, Randall L. // Advances in Consumer Research;1986, Vol. 13 Issue 1, p72 

    The representation of attitude structure and associated causal issues has been a topic of considerable interest recently. This research examines whether variations in outcome evaluation produce corresponding variations in attitude, the discriminant validity between the cognitive and affective...

  • Predicting Buyer-seller Pricing Disparities. Casey, Jeff T. // Management Science;Jun95, Vol. 41 Issue 6, p979 

    Numerous studies have shown that compensation demanded (CD) to give up a commodity often greatly exceeds willingness to pay (WTP) to obtain the same commodity, even in incentive compatible experiments that penalize strategic misrepresentation. Observed CD/WTP disparities are too large to be...

  • Dynamic Pricing with Loss Averse Consumers And Peak-end Anchoring. Kleindorfer, Paul // INSEAD Working Papers Collection;2010, Issue 20, p1 

    We study the dynamic pricing implications of a new, behaviorally motivated reference price mechanism, based on the peak-end memory model of Fredrickson and Kahneman (1993). This model suggests that consumers anchor on a reference price which is a weighted average of the lowest and most recent...

  • Dynamic Pricing with Loss Averse Consumers and Peak-End Anchoring. Nasiry, Javad; Popescu, Ioana // INSEAD Working Papers Collection;2010, Issue 102, preceding p1 

    We study the dynamic pricing implications of a new, behaviorally motivated reference price mechanism, based on the peak-end memory model of Fredrickson and Kahneman (1993). This model suggests that consumers anchor on a reference price which is a weighted average of the lowest and most recent...

  • Does Choice between an Endogenous and a Fixed Poverty Line Affect the Poverty Outcome of Policy Reforms? Dartanto, Teguh // Modern Economy;Sep2011, Vol. 2 Issue 4, p667 

    Most of studies on the poverty impact of policy reforms assumed the poverty line as a fixed line; thus, the poverty outcome of policy reforms may underestimate (overestimate) and mislead in policy guidance. This research aims at theoretically investigating the difference of poverty outcomes...

  • LINKING THE SUBSTITUTION AND OUTPUT EFFECTS OF PRODUCTION TO PROFIT MAXIMIZATION IN THE INTERMEDIATE MICROECONOMICS COURSE. Wolcowitz, Jeffrey // Business Education & Accreditation;2014, Vol. 6 Issue 1, p13 

    In a recent article, Thaver (2013) makes the case for including in intermediate microeconomics textbooks analysis of the substitution and output effects of a firm's response to a change in the price of an input. In her analysis, Thaver assumes that the firm is constrained by a fixed budget for...

  • CONCEPT FORMATION, PRODUCT CONCEPTUALIZATION AND COGNITIVE DEVELOPMENT. Hirschman, Elizabeth C. // Advances in Consumer Research;1980, Vol. 7 Issue 1, p405 

    This paper examines the acquisition of concepts by consumers and the nature of conceptual structure incorporated in semantic memory. Alternative perspectives are provided to the assumptions underlying the multiattribute attirude model. Additionally, a model of ontogenetic information acquisition...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sign out of this library

Other Topics