The Experimental Study On Mental Accounting And Irrational Decision-making In Economics

This dissertation includes seven intact experimental studies regarding the mental accounting of Chinese people. They are (1) the implicit structure of mental accounting, (2) the cognitive model and evaluation dimension, (3) the basic traits, (4) the difference of mental accounting of different sub-group of Chinese people, (5) the expense model of different income sources, (6) the effects of relative saving and absolute saving, (7) the salary motive effects of mental accounting. We conducted three times questionnaire, which we inquired 5057 people in nine cities of China. And we did experimental studies that totally involved 1075 people in three experiments. Our research revealed several significant conclusions.1. The results from factor analysis and cluster analysis demonstrated that the mental accounting of Chinese people showed a "3-4-2" implicit structure, in which "3" stands for three income accounts: regular income, investment income, and windfall income; "4" stands for four expense accounts: commodity expense, developmental expense, hedonic expense, and relationship expense; "2" stands for saving accounts: security save account, and risk invest account. The classification of mental account revealed the psychological desires of Chinese people, which were utility demand and hedonic demand.2.Multi-dimension scaling method and semantic distinction questionnaire were applied to reveal the basic traits and potential evaluation dimension of the mental accounting. The results showed that the Chinese people evaluate their income based on "anticipate - unanticipated" and "important-unimportant", while evaluate their expense based on " commodity-hedonic" and "important-unimportant" and evaluate the savings based on "security-investment" and "safe-risk".3. A three-factor mental accounting model was proposed for Chinese people based on the results from Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA). The three typical characters were non-fungibility, mental budgeting, and flexibility. Among them, non-fungibility was the most intrinsic character.4. Different people showed significant difference in the three factors of mental accounting. For example, Males had higher mental budgeting than females. Education showed a positive correlation to mental budgeting and flexibility, which means people with higher education, hadbetter mental budgeting and more flexibility. Education also showed a negative correlation to non-fungibility. Additionally, economical level showed a positive correlation to mental budgeting and flexibility. Furthermore, knowledge workers had better flexibility in their mental accountings.5. This study also showed that the source of income affected the money spending behavior of Chinese people. This might be due to people had different perspective to different mental accounting. For example, unanticipated money was more likely to be spent on relationship development, hedonic activities, and savings; the regular income was more likely to be spent on commodity expense, savings, and personal development.6. We investigated the application of mental accounting in consumption behavior study and found that people had different perspective on relative saving and absolute saving, which is accordance with the relative saving and absolute saving effects. We also found the "reference point effects", "gain and loss intensity effects", and "value form effects" in the salary motive study.Our study explored the implicit structure, characterization and intrinsic mechanism of mental accounting of Chinese people, revealed the possible intrinsic rule between mental accounting and irrational decision-making, as well as the application of mental accounting in the study of individual and population economical behavior. Further application of mental accounting theory in different consumption areas needs to be conducted in the future.