What is the definition of mental accounting? How to measure it?

My honor!

What a detailed reply!

Definition of Mental Accounting

Mental accounting is a behavioral economics concept introduced by Richard Thaler, referring to the cognitive process by which individuals categorize, evaluate, and keep track of financial activities. It describes how people assign different values to the same amount of money based on subjective criteria, leading to irrational financial decisions, such as treating money differently depending on its source or intended use.

Measuring Mental Accounting

Mental accounting can be measured through:

Surveys and questionnaires: Assessing individuals' perceptions and categorization of money.

Behavioral experiments: Observing decision-making in scenarios involving different financial contexts.

Case studies: Analyzing real-life financial decisions to identify patterns of mental accounting.