2008/01/01 by Richard H. Thaler · 1 citation
Decision Sciences · Business, Management and Accounting · #Decision-Making and Behavioral Economics #Organizational Management and Leadership #Consumer Market Behavior and Pricing #Mental accounting #Consumer choice #Database transaction #Economics #Consumer behaviour #Marketing #Function (biology) #Transaction cost #Coding (social sciences) #Microeconomics #Value (mathematics) #Computer science #Business #Sociology
paper · doi:10.1287/mksc.1070.0330
openalex publication_date 2008/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
Anew model of consumer behavior is developed using a hybrid of cognitive psychology and microeconomics. The development of the model starts with the mental coding of combinations of gains and losses using the prospect theory value function. Then the evaluation of purchases is modeled using the new concept of “transaction utility.” The household budgeting process is also incorporated to complete the characterization of mental accounting. Several implications to marketing, particularly in the area of pricing, are developed. This article was originally published in Marketing Science, Volume 4, Issue 3, pages 199–214, in 1985.