Thaler, Richard
June 1985
Marketing Science;Summer85, Vol. 4 Issue 3, p199
Academic Journal
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 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.


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