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Tracking Costs of Time and Money: How Accounting Periods Affect Mental Accounting

  • Robin L. Soster
  • Ashwani Monga
  • William O. Bearden
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    After people incur costs to get future benefits, they usually track these costs in their mental accounts and are keen to receive the benefits when they become available. We introduce the notion that costs and benefits can occur either in the same accounting period (day, season, etc.) or in different periods. Our key argument is that monetary costs are tracked across accounting periods but that temporal costs are written off at the end of the period in which they are incurred. Thus, accounting periods lead to a time-money asymmetry in the tracking of costs and, consequently, in the likelihood of seeking benefits. In a laboratory study, an online-panel study, and a field study with movie-theater patrons, we demonstrate how this relationship among accounting periods, cost tracking, and benefit seeking is different for time than for money. Our findings offer insights into the sunk-cost effect, time-money differences, and mental accounting. (c) 2010 by JOURNAL OF CONSUMER RESEARCH, Inc..

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    File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/656388
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    Article provided by University of Chicago Press in its journal Journal of Consumer Research.

    Volume (Year): 37 (2010)
    Issue (Month): 4 (December)
    Pages: 712-721

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    Handle: RePEc:ucp:jconrs:v:37:y:2010:i:4:p:712-721
    Contact details of provider: Web page: http://www.journals.uchicago.edu/JCR/

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