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The Effect of Bracketing on Spending

Amar Cheema
McIntire School of Commerce

Dilip Soman
University of Toronto - Department of Marketing

January 8, 2006

Abstract:
This research studies how bracketing one large pot of money into several small pots affects spending patterns. Because individuals usually make decisions in the frame provided to them (Slovic, 1972), bracketing one large pot into several small pots may necessitate breaking open multiple pots to spend. Breaking open a pot, which may be similar to breaking a rule, is aversive to individuals. Thus, they may spend less, and more slowly, from several small pots than from one large pot. We demonstrate the consequences of bracketing for gambles with real monetary implications and explore how bracket artificiality moderates this effect.

Keywords: Mental Accounting, Self Control, Bracketing, Transgression Cost, Willpower

JEL Classifications: C91, D9, M30, M31

Working Paper Series

Date posted: January 17, 2006 ; Last revised: January 17, 2006

Suggested Citation

Cheema, Amar and Soman, Dilip, The Effect of Bracketing on Spending (January 8, 2006). Available at SSRN: http://ssrn.com/abstract=875661

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Contact Information

Amar Cheema (Contact Author) McIntire School of Commerce ( email ) P.O. Box 400173 Charlottesville, VA 22904-4173 United States 434-924-3034 (Phone) HOME PAGE: http://www.amarcheema.com
Dilip Soman University of Toronto - Department of Marketing ( email ) 105 St. George Street Toronto, Ontario M5S 3E6 Canada

Abstract

References (22)

Date posted: January 17, 2006 ; Last revised: January 17, 2006

Suggested Citation

Contact Information

Amar Cheema (Contact Author)

Dilip Soman