The Application and Inspiration of Mental Accounting: Spending of Different Income Source, Consumption During Valentines Day

Abstract

It is always being a common phenomenon of seeing people act differently in consumption of a same amount of money. In the practice of mental accounting, people place different sources of income in different account and spend with different attitude and belief. Studies are developing more explanations of the theory, but still there is a lack of awareness of how mental accounting would impact a person's life. This article provides a holistic review of mental accounting by presenting two practical applications through comparative analysis method which result in discussions and analyze about the theory, existed problems and workable solutions that can be applied. In the application part, the focus is on the difference between two sources of income in concern with mental accounting and their traces of laws to follow and the different performance and changes are made in sales of rose under different environment and scenarios. There are clear findings of how people treat their money in separate ways based on how they get it under different situations, such as wasteful spending of lottery payoff and carefully spending of salary. Thus, raising awareness of this effect could bring educational benefits that prevent irrational behavioral and unpleasant results.