Download This PaperThe Effect of Bracketing on Spending
19 Pages Posted: 17 Jan 2006
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: Suggested Citation
Dilip Soman
University of Toronto - Behavioural Economics in Action at Rotman (BEAR) ( email )
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