BazermanMoore

Mental Accounting 75
systematically higher spending from someone with $100,010 net wealth than from
someone with $100,000 net wealth. Yet Milkman, Beshears, Rogers, and Bazerman
(2008), working with an online grocery ordering and delivery service, find people
spend more at the grocery store after they have just received a ‘‘$10 off’’ certificate.
To be specific, $2 of the $10 goes to increased purchases. The ease with which people
spent their newfound wealth is consistent with Thaler’s behavior, though on a
more mundane scale.
Similarly, Shafir and Thaler (2006; Thaler, 1999) asked a group of subscribers to a
wine newsletter to consider the following problem:
Problem 13. Suppose that you bought a case of a good 1982 Bordeaux in the futures market
for $20 a bottle. The wine now sells at auction for about $75 per bottle. You have
decided to drink a bottle.
Which of the following best captures your sense of the cost of your drinking this bottle?
a. $0
b. $20
c. $20 plus interest
d. $75
e. –$55 (you’re drinking a $75 bottle for which you paid only $20)
Shafir and Thaler (2006; Thaler, 1999) report that the percentages for each of the
answers were (a) 30 percent, (b) 18 percent, (c) 7 percent, (d) 20 percent, and (e) 25
percent. The authors note that the newsletter was published by an economist, Orley
Ashenfelter, and that most of the respondents who answered ‘‘d’’ were also economists—the
answer consistent with economic analysis. The rest of us do not think about
the value of our assets based on what they are currently worth. Rather, we either treat
costs as something that we have already expensed away (option a), as the cost that we
paid (option b), or in terms of the value of the transaction (option e—you made money
by making a good purchase).
Your mental accounts can also affect your satisfaction with outcomes that you did
not choose. Consider the following two outcomes (adapted from Thaler, 1985):
Outcome A. You receive a letter from the IRS saying that you made a minor arithmetic
mistake in your tax return and must send them $100. You receive a similar letter the same
day from your state tax authority saying you owe them $100 for a similar mistake. There are
no other repercussions from either mistake.
Outcome B. You receive a letter from the IRS saying that you made a minor arithmetic
mistake in your tax return and must send them $200. There are no other repercussions
from the mistake.
Which situation would be more upsetting? Most people are more upset by Outcome
A, the two small losses, than by Outcome B, the one larger loss, despite the fact
that the two outcomes are equal in financial terms. This emotional reaction is consistent