Mental accounting and acceptance of a price discount examines how framing discounts differently impacts acceptance. Three experiments were conducted: 1) Replicated the classic calculator problem, finding most accepted the $5 discount on a $15 calculator but not a $125 jacket. 2) Added a categorical link between purchases but found a smaller difference in acceptance. 3) Embedded purchases in a shopping list, which eliminated differences in acceptance rates between frames. The research demonstrates people's tendency to use narrow accounting but switch to comprehensive accounting when multiple related purchases are considered.

1. Mental accounting and
acceptance of a price discount
GROUP MEMBER:
- PHAN TỪ NHƯ Ý
- BÙI XUÂN NAM QUÂN
- VŨ THANH PHƯƠNG
- NGUYỄN NGỌC THANH XUÂN

2. Table of content
1.Introduction
2.Literature Review
3.Methodology
4.Result
5.Discussion

3. Introduction
 Based on article: Mental accounting and acceptance of
a price discount - Nicolao Bonini, Rino Rumiati
 According to Tversky and Kahneman (1981), People
show a difference in the rate of acceptance of a price
reduction across the two versions of these
experiments
 The objective of this research is studies the effect of
mental accounting on the acceptance on the price
deduction

4.  Conducted 3 experiments to investigate the effect
 Experiment 1: Provide a baseline to which the results of the
other experiments are compared.
 Experiment 2: A categorical link between the two purchases is
provided.
 Experiment 3: The two purchases are embedded in a shopping
list that includes four products
 Each of the experiments have the sample size about 70
peoples
Introduction

5. LITERATURE REVIEW

6. - “Calculator problem” (cf. Tversky and Kahneman, 1981, p. 457)
- Jacket ($125)[$15]
• Calculator ($15) [$125] ($10) [$120]
- Result: most people (68%) will travel to save the $5 on the cheaper
item but not on the more expensive one (29%).
Trip – 20
minutes
LITERATURE REVIEW

7. Trip – 20
minutes
LITERATURE REVIEW
- Jacket ($125)[$15]
 Calculator ($15) [$125] ($10) [$120]
] Findings
Kahneman and Tversky
(1984)
3 ways to frame results:
Topical account, minimal account,
comprehensive account
 Ready to travel in the ($) version of the
test but not the case in the [$] version
 $5 discount is more important with
respect to $15 and then deserves a travel
to the other branch of the store

8. Trip – 20
minutes
LITERATURE REVIEW
- Jacket ($125)[$15]
 Calculator ($15) [$125] ($10) [$120]
Based on the study of
...
Findings
Thaler [1980,1985] “ people perceive outcomes in terms of a
value function defined over gains and
losses relative to a reference point”
In the case of multiple outcomes, people
code coutcomes to maximize their
happiness (in the shape of the value
function)

9. METHODOLOGY

10. Approach
Minimal Account
 Meaning
Advantage associated with
driving
= price reduction = amount
gained for both cases
 Happens when only one
purchase
Comprehensive Account
 Meaning
Advantage associated with driving
= ending wealth = existing wealth +
(jacket + calculator) - total price
 Happens when price reduction relates
to other expenses, eg, there exist a
planned shopping list
New research  experiment adjustments = strengthen the relation between
purchases

11. Fundamental
Experiment
Categorical Link
Experiment
Shopping List
Experiment
Description replicate Tversky and
Kahneman's (1981)
calculator problem.
We provide a
categorical link between
two purchases
We updgrade the
shopping list to 4
items.
Test the effect of close
relation in accepting a
discount price
the existence of a
comprehensive
account.
Question Is there a difference in
acceptance of a price
reduction between two
versions of the
calculator’s price?
Is there a difference in
acceptance of a price
reduction of a chair in
the ’same category’
condition?
Is there a difference in
acceptance of a price
reduction of a
calculator added in a
shopping list?
How we adjust experiments

12. How WE evaluate the results
 Conduct surveys across 210 IU students for 3
experiments (average 70 respondents/ experiment)
 Collect answers
 Run Chi-square test to determine whether there is any
difference between the observed value and the
expected value across different experiments

13. RESULT

14. EXPERIMENT 1: X2(1) = 15.9, P < 0.0001
Control
Low-price calculator
(70,000 VND)
High-price calculator
(630,000 VND)
Yes
No
Total
28 (80%)
07 (20%)
35
11 (32%)
23 (68%)
34
Symmetric Measures
Value Approx. Sig.
Nominal by Nominal Phi
,481 ,000
Cramer's V
,481 ,000
N of Valid Cases
69
0
5
10
15
20
25
30
Low version High
version
Yes
No

15. Result
 Table results show that the majority of subjects (80%)
accepts the calculator price reduction in the first
version of the problem whereas the minority of
subjects (32%) accepts it in the second version (X2(1)
= 15.9, p < 0.0001).
 There is a strong relationship (Phi and Cramer’s V
value are .481) between the calculator’s price and the
rate of discount acceptance.

16. Experiment 2: X2(1) = 4.87, not significant
Same category condition
Low-price
chair
(70,000 VND)
High-price
chair
(630,000
VND)
Yes
No
Total
24 (71%)
10 (29%)
34
15 (44%)
19 (56%)
34 0
5
10
15
20
25
30
Low version High version
Yes
No

17. Result
 The effect in the previous experiment is not found in
this experiment. The difference in the level of
acceptance reduces from 48% in the first experiment
to 27% in this situation.
 That change in acceptance level could be due to the
manipulation of the ‘categorical link’ designed in this
experiment (a chair and a table)

18. Experiment 3: X2(1) = 0.101, not significant
 The effect in the first experiment disappear totally in this
shopping list experiment (the same result as in the key paper)
Shopping list condition
Low-price
calculator
(70,000 VND)
High-price
calculator
(630,000 VND)
Yes
No
Total
23 (68%)
11 (32%)
34
25 (64%)
14 (36%)
39 0
5
10
15
20
25
30
Low version High version
Yes
No

19. DISCUSSION

20. SURVEY QUESTION
 Choose 3 over 5 experiments to test the problem
 In paper: choose students attending psychology course
in Western University
 In our survey: Form a small group around 60 students
from different majors (finance, business,
biotechnology)
Different mindset.

21. COMPARISON of our result vs paper
 Experiment 1: show the same result which majority of
subjects accepts the calculator price reduction in the
first version, whereas the minority accepts the second
version.
=> The finding show that people tend to use “topical
account” (Kahneman and Tversky 1984) when offered
price reduction.
=> Tend to focus more on planned purchase when facing
2 different categories

22. COMPARISON of our result vs paper
 Experiment 2: show the same result which is majority
of subjects accepts the little price reduction in the first
version of problem
 In paper: the rate of acceptance across 2 version in 2nd
experiment is similar to the previous experiment (18% & 20%)
=> can’t reduce the difference in the rate of acceptance of price
reduction due to weak manipulation of category link between “chair &
little table”
 Our result: the rate of acceptance across 2 version in 2nd
experiment is reduce from 48% to 27% comparing to 1st
experiment but are still high rate
=> The effect in previous experiment disappears.

23. COMPARISON of our result vs paper
 Experiment 3: show the same result, the effect
reported in experiment 1 disappears.
Comprehensive account, using shopping list makes
relationship between products is stronger.
No difference in rate of acceptance of price reduction
across 2 versions

24. SUMMARY
 In calculator problem, tend to accept cheaper
calculator -> using topical account
 When applied planned purchases in shopping list, the
effect in calculator problem disappears. -> using
comprehensive account.
 In general, the paper’s result is proved
 Different environment
 Different mindset
=> Still the same result.

25. THANK YOU