Mental Accounting and the Absent-minded Driver

Abstract The term ‘mental accounting’ refers to a variety of phenomena in which money is non-fungible. Since the pioneering works of Kahneman, Tversky, and Thaler (Kahneman and Tversky, 1979, 1984; Tversky and Kahneman, 1981; and Thaler, 1980, 1985) it has become abundantly clear that people do not treat all dollars alike. Rather, people manage different accounts in their minds, in which money has origins and goals that cannot be ignored when this money is spent.