Explain What Is Meant by Mental Accounting and Describe the Disadvantages

question 16

Essay

Explain what is meant by mental accounting and describe the disadvantages of mental accounting for financial decision making.

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Definitions:

Short-term Storage

The part of the memory system where information is temporarily held before it is either forgotten or transferred to long-term memory.

Procedural Memory

A type of long-term memory for performing certain types of tasks or procedures, such as riding a bike or typing, without conscious awareness of the previous experiences.

Bicycling

The use of a bicycle for transportation, recreation, exercise, or sport.

Episodic Memory

A form of enduring memory that is concerned with remembering distinct occurrences, contexts, and personal experiences.