Effects of Spikes in the Price of Gasoline on Behavioral Intentions: A Mental Accounting Explanation

33 Pages Posted: 9 Feb 2011  

John Godek

University of Washington, Bothell - Business Administration

Kyle B. Murray

University of Alberta - Department of Marketing, Business Economics & Law

Date Written: February 7, 2011

Abstract

In recent years gasoline prices have spiked in response to world events, only to fall again within weeks or months. Anecdotal evidence suggests that these price fluctuations have a substantial impact on consumers’ planned spending and their overall perceptions of financial well-being. We propose that consumers’ behavioral intentions in response to these spikes are driven in part by how consumers mentally account for the fluctuations in gasoline prices. Specifically, we contend that people allocate sharp increases in the price per gallon of gasoline to a comprehensive mental account. As a result, such increases affect consumers’ perceptions of their overall cost of living and have far-reaching effects on their planned spending. These predictions are tested in three experiments. The paper concludes with a discussion of the theoretical and applied implications of the results.

Keywords: pricing, energy, gasoline, gas, consumer behavior, judgment and decision making, mental accounting

JEL Classification: C91, M31, D12

Suggested Citation

Godek, John and Murray, Kyle B., Effects of Spikes in the Price of Gasoline on Behavioral Intentions: A Mental Accounting Explanation (February 7, 2011). Available at SSRN: https://ssrn.com/abstract=1757240 or http://dx.doi.org/10.2139/ssrn.1757240

John Godek

University of Washington, Bothell - Business Administration ( email )

18115 Campus Way NE
Bothell, WA 98011-8246
United States

Kyle B. Murray (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada
780-248-1091 (Phone)
780-492-4631 (Fax)

HOME PAGE: http://www.kylemurray.com

Paper statistics

Downloads
91
Rank
228,269
Abstract Views
507