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mental accounting

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    Framing Effects Entry #0508

    The reason gains are split and losses combined

    Two pieces of good news arrive on separate days. One piece of bad news arrives all at once. The pattern is not random and not accidental.

    Adept
    The hidden part #0508

    Good news is separated so it is felt twice. Bad news is combined so it is felt once. The arithmetic is the same; the experience is not.

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    Price Psychology Entry #0354

    The reason free shipping outperforms an equal discount

    Removing a five-pound delivery fee converts better than taking five pounds off the item. The two are arithmetically identical and psychologically separate.

    Adept
    The hidden part #0354

    A fee is a loss with no matching gain. Folding it into the price removes the loss without changing the total.

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    Framing Effects Entry #0502

    The reason a loss framed as a cost is accepted

    Call it a loss and the person resists. Call it a cost and the same person accepts it as the price of doing business. The amount has not changed; the category has.

    Adept
    The hidden part #0502

    Category assignment alters resistance. The loss and the cost are the same number; the frame decides whether the number is endured or fought.

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    Price Psychology Entry #0364

    The reason instalments change what people buy

    A total is compared against savings; a monthly figure is compared against small routine expenses. Changing the unit changes which comparison is made.

    Adept
    The hidden part #0364

    The unit chooses the comparison. A monthly figure is measured against small habits, a total against savings.

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    Framing Effects Entry #0523

    Why calling something an investment ends the price discussion

    A cost is judged against a budget. An investment is judged against a return, and returns are estimated in the future where nobody can check them.

    Adept
    The hidden part #0523

    Calling a cost an investment does not argue the price down. It moves the number to an account judged by a forecast.

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