Elementary 'psychological accounting'
Imagine you are going to a play where admission is $10 perticket. As you enter the theater you discover you have lost a $10 bill. Would you still pay $10 for a ticket to the play?
Now imagine you go to the play after having paid the $10admission fee, but as you enter the theater you discover that the ticket is lost. The seat was unmarked and the ticket cannot be recovered. Would you pay $10 for another ticket?
In 1981, psychologists Amos Tversky of Stanford Universityand Daniel Kahneman of the University of British Columbia in Vancouver posed these questions to adult subjects and found that a new ticket is more likely to be purchased when money is lost rather than when an original ticket is lost. They theorized that the purchase of a new ticket is charged to a "psychological account." If a previous ticket is lost, the total cost of admission is $20, enough to dissuade a majority of people from buying a second ticket. The loss of money, however, is not specifically …