The Role of Mental Accounting in Household Spending and Investing Decisions
Forthcoming in C. Chaffin (Ed.), Client Psychology. New York: Wiley
31 Pages Posted: 12 Oct 2017 Last revised: 10 Feb 2019
Date Written: December 4, 2017
This chapter reviews recent advances in the literature on mental accounting - the process by which people group expenses into categories, assign funds to these categories, determine budgets, and perform elements of cost-benefit analyses. We focus in particular on mental accounting within the context of consumer financial decision-making and highlight some of the notable work in this growing area that examines how mental accounting influences budgeting, spending, and investment decisions. The chapter concludes by suggesting several promising avenues for future work.
Keywords: mental accounting, consumer finance, financial decision-making
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