An investor has her money segregated into checking, savings, and investments. The allocation among the categories is subjective, yet the investor spends freely from the checking account and not the others. This behavior can be explained as ________.

Question

Quizplus · Accepted Answer

This behavior can be explained by mental accounting, where the investor is mentally segregating her money into different categories and spending only from the checking account, while considering the savings and investments as separate and locked away for future use.

An Investor Has Her Money Segregated into Checking, Savings, and Investments