Thaler introduced the idea of mental accounting, where people treat money differently based on its source or intended use. This behavior often leads to irrational decisions, like splurging tax refunds while being frugal with regular income.
“Mental accounting matters because it influences decisions and behavior, often leading to suboptimal choices.”
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Richard Thaler’s *Misbehaving* reveals how human quirks and irrational behaviors challenge traditional economics, paving the way for behavioral economics.
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