Kahneman and Tversky are correct about "mental accounts," household budgeting
A)should help families cut back on spending.
B)leads families to spend more than if they did not budget.
C)should have no effect on spending.
D)will encourage families to earn more money than they would if they did not budget.

Question

Quizplus · Accepted Answer

Kahneman and Tversky's concept of "mental accounting" suggests that people categorize their money into different accounts for specific purposes, which can influence their spending behavior. By budgeting and allocating money into these mental accounts, families are more aware of their spending and can make more conscious decisions to cut back on unnecessary expenses, thus helping them to reduce overall spending.

Kahneman and Tversky Are Correct About "Mental Accounts," Household Budgeting