Abstract

https://ssrn.com/abstract=1757240
 
 

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


John Godek


University of Washington, Bothell - Business Administration

Kyle B. Murray


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

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.

Number of Pages in PDF File: 33

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

JEL Classification: C91, M31, D12


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Date posted: February 9, 2011  

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

Contact Information

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

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