ABSTRACT
If consumers had infinite computing capacity and perfect self-control, they would estimate their total lifetime accumulation of wealth and decide whether to make each purchase by comparing the utility of that purchase to the utility of the next best use of the money, or in some cases, to the best use of money, in which case the purchase would not occur. However, for a variety of reasons, consumers find it useful to set up mental accounts (Thaler, 1985, 1999), which help classify different sources of income (Henderson & Peterson, 1992), different pools of savings (e.g., Shefrin & Thaler, 1992; Thaler & Shefrin, 1981), and different categories of spending (e.g., Heath & Soll, 1996), in some cases linking one set of categories (e.g., income sources) to another (e.g., spending categories; see, e.g., O’Curry, 1997). Although mental accounting strategies can yield patterns of behavior that deviate from rational standards (e.g., Arkes & Blumer, 1985; Tversky & Kahneman, 1981), people employ mental accounting for a reason. Mental accounts help consumers rationalize expenditures and enhance self-control (see Thaler, 1985, 1999) and can, in certain situations, also help consumers derive greater enjoyment from their spending (Loewenstein & O’Donoghue, 2006).
