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Mental accounting (or psychological accounting) is a model of consumer behaviour developed by Richard Thaler that attempts to describe the process whereby people code, categorize and evaluate economic outcomes. [2]
Richard H. Thaler (/ ... he was a faculty member at the SC Johnson College of Business at Cornell University. ... Thaler, R., 1985. Mental Accounting and Consumer Choice.
Mental accounting is a behavioral bias that causes one to separate money into different categories known as mental accounts either based on the source or the intention of the money. [58] Anchoring. Anchoring describes when people have a mental reference point with which they compare results to. For example, a person who anticipates that the ...
Her research on mental accounting and consumer purchasing behavior [9] was cited in the Scientific Background for Thaler's 2017 Nobel Prize. [10] Hastings' subsequent research measured how mental accounting impacts grocery spending for Supplemental Nutrition Assistance Program (SNAP) participants.
Loss aversion was popular in explaining many phenomena in traditional choice theory. In 1980, loss aversion was used in Thaler (1980) regarding endowment effect. [8] Loss aversion was also used to support the status quo bias in 1988, [9] and the equity premium puzzle in 1995. [10]
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Adopted by Gen Z and Gen Alpha, it gained new prominence in 2024, according to Oxford, as a term used to capture concerns about the impact of consuming excessive amounts of "low-quality online ...
One of the main justifications for Thaler's and Sunstein's endorsement of libertarian paternalism in Nudge draws on facts of human nature and psychology. The book is critical of the homo economicus view of human beings "that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists."