Mental accounting : the psychology of South African consumer behaviour

Abstract

When standard economic theories failed to be consistent predictors of consumer behaviour, Thaler (1980, 1985) developed the theory of mental accounting, which takes behavioural factors into consideration. Prelec&Loewenstein (1998), Heath&Soll (1996) and Gourville&Soman (1998) extended Thaler’s (1980,1985) work to develop the theories of prospective accounting, mental budgeting, and payment depreciation of the sunk cost effect. The purpose of this research is to use the methodologies of Prelec& Loewenstein (1998), Heath&Soll (1996), and Gourville&Soman (1998) to determine whether their theories of mental accounting exist amongst South African consumers. If this is found to be the case, the findings can be used by marketers towards the creation of a strategy that could exploit these effects. This research shows that there is insufficient evidence for the existence of mental budgeting amongst South African consumers. However, there is significant evidence for the existence of prospective accounting and the sunk cost effect. In addition, a variation of payment depreciation was found to exist. Thus, mental accounting has been shown to exist amongst South African consumers.