Joshua is tired of school and his part-time job and decides on the spur of the moment to take a weekend trip to Cabo San Lucas. He pays for it with his credit card rather than with money from his checking account. Which type of irrational behavior does this best represent?

Question

Quizplus · Accepted Answer

Mental accounting refers to the tendency of individuals to categorize and treat money differently depending on its source or intended use. Joshua's decision to use a credit card instead of his checking account for a spontaneous trip suggests he is mentally accounting the credit card as a separate or less immediate financial burden.

Joshua Is Tired of School and His Part-Time Job and Decides