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Can You Afford It? How Mental Accounting Affects Proper Judgment

Most people, if not everyone, use mental accounting on a daily basis when it comes to financial decisions. A common example would be the way a person more readily spends his year-end bonus.

Take one more example: If you were going to spend $100 on an item and realised there was a cheaper source 15 minutes away selling it for $95, would you take the effort to obtain it from the cheaper source? What if the item was $10, and the other place was selling it for $5?

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