Background : Research has shown that beliefs about one's capacity to savour positive outcomes, a form of perceived control over positive emotions, are largely independent of beliefs about coping, a form of perceived control over negative emotions. Aim : To describe a new measure of savouring beliefs, the Savoring Beliefs Inventory (SBI). Method : Six studies validating the SBI that is designed to assess individuals'...

Construal level theory proposes that temporal distance changes people's responses to future events by changing the way people mentally represent those events. The greater the temporal distance, the more likely are events to be represented in terms of a few abstract features that convey the perceived essence of the events (high-level construals) rather than in terms of more concrete and incidental details of the events...

A previously unobserved pattern of choice behavior is predicted and corroborated. In line with the principle of compatibility, according to which the weighting of inputs is enhanced by their compatibility with output, the positive and negative dimensions of options (their pros and cons) are expected to loom larger when one is choosing and when one is rejecting, respectively. Subjects are presented with pairs of options,...

A wine-loving economist we know purchased some nice Bordeaux wines years ago at low prices. The wines have greatly appreciated in value, so that a bottle that cost only $10 when purchased would now fetch $200 at auction. This economist now drinks some of this wine occasionally, but would neither be willing to sell the wine at the auction price nor buy an additional bottle...

Most real decisions, unlike those of economics texts, have a status quo alternative—that is, doing nothing or maintaining one's current or previous decision. A series of decision-making experiments shows that individuals disproportionately stick with the status quo. Data on the selections of health plans and retirement programs by faculty members reveal that the status quo bias is substantial in important real decisions. Economics, psychology, and...

This article examines systematic differences in people's spending behavior when using foreign currencies. Rather than overspend or underspend in general, we show that individuals' valuation of a product in an unfamiliar foreign currency is biased toward its nominal value—its face value—with inadequate adjustment for the exchange rate. This leads to underspending when the face value of a foreign currency is a multiple of an equivalent...

In today's marketplace, price bundling is widespread: Manufacturers and retailers routinely offer multiple products for a single, bundled price. Although the effects of price bundling on purchase behavior have been well researched, the effects of price bundling on postpurchase consumption behavior have received almost no attention. In this article, the authors build on the sunk cost literature (e.g., Thaler 1980, 1985) and predict that price...

Mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities. Making use of research on this topic over the past decade, this paper summarizes the current state of our knowledge about how people engage in mental accounting activities. Three components of mental accounting receive the most attention. This first captures how outcomes are...

A new 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...

The psychological principles that govern the perception of decision problems and the evaluation of probabilities and outcomes produce predictable shifts of preference when the same problem is framed in different ways. Reversals of preference are demonstrated in choices regarding monetary outcomes, both hypothetical and real, and in questions pertaining to the loss of human lives. The effects of frames on preferences are compared to the...