The Effect of Bracketing on Spending

19 Pages Posted: 17 Jan 2006

See all articles by Amar Cheema

Amar Cheema

University of Virginia (UVA), McIntire School of Commerce

Dilip Soman

University of Toronto - Behavioural Economics in Action at Rotman (BEAR)

Date Written: 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 Classification: C91, D9, M30, M31

Suggested Citation

Cheema, Amar and Soman, Dilip, The Effect of Bracketing on Spending (January 8, 2006). Available at SSRN: https://ssrn.com/abstract=875661 or http://dx.doi.org/10.2139/ssrn.875661

Amar Cheema (Contact Author)

University of Virginia (UVA), McIntire School of Commerce ( email )

125 Ruppel Drive
Charlottesville, VA 22903
United States
434-924-4350 (Phone)

HOME PAGE: http://www.commerce.virginia.edu/faculty/cheema

Dilip Soman

University of Toronto - Behavioural Economics in Action at Rotman (BEAR) ( email )

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