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Mental Accounting Definition and Explanation PDF Download

Learn Mental Accounting definition in marketing with explanation to study “What is Mental Accounting”. Study mental accounting explanation with marketing terms to review marketing course for online MBA programs.

Mental Accounting Definition:

  • Manner by which consumers code, categorize, and evaluate financial outcomes of choices.

    Principles of Marketing by Philip T. Kotler, Gary Armstrong



Mental Accounting Explanation:

Mental bookkeeping is an idea in the field of conduct financial aspects. Created by financial specialist Richard H. Thaler, it fights that people order individual assets distinctively and consequently are inclined to nonsensical - even impeding - basic leadership in their spending and speculation conduct. Basic the hypothesis is the idea of fungibility (manageability) of cash. To state cash is fungible implies that, paying little heed to its sources or expected use, all cash is the equivalent. To maintain a strategic distance from the psychological bookkeeping predisposition, people should regard cash as flawlessly fungible when they designate among a spending account (ordinary everyday costs), optional spending account, and a riches account (reserve funds and speculations).

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