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Unformatted text preview: Mental accounting:-If lost a $20 will you still pay for the ticker? o 88% said Yes because two events are unrelated-If lose ticket do you buy another one? o 54% said No because related What it mental accounting? “We have accounts in our heads” Mental accounting arithmetic 1. Multiple gains: o Example: A is happier because 2 for 2—wont twice Segregate them to increase happiness 2. Multiple losses: o Example: A is more upset because 2 letters are worse to have 2 negative events Prefer integrated losses 3. Mixed gains: o Example: B because no negative events o Prefer integration 4. Mixed losses: o Example: B because no positive event o Prefer segregation Transaction utility: A. Beer at fancy resort: $3.88 B. Beer at grocery store: $2.00 o Prices are form 1988-Assume that costs more for resort (cost driven consumption) Fairness: main determinant of reference price...
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- Spring '08
- Pricing, $20, 60%, 54%, $95, $3.88