Jove
Visualize
Contact Us
JoVE
x logofacebook logolinkedin logoyoutube logo
ABOUT JoVE
OverviewLeadershipBlogJoVE Help Center
AUTHORS
Publishing ProcessEditorial BoardScope & PoliciesPeer ReviewFAQSubmit
LIBRARIANS
TestimonialsSubscriptionsAccessResourcesLibrary Advisory BoardFAQ
RESEARCH
JoVE JournalMethods CollectionsJoVE Encyclopedia of ExperimentsArchive
EDUCATION
JoVE CoreJoVE BusinessJoVE Science EducationJoVE Lab ManualFaculty Resource CenterFaculty Site
Terms & Conditions of Use
Privacy Policy
Policies

Related Experiment Videos

Mental Depreciation and Marginal Decision Making

Heath1, Fennema

  • 1University of Chicago

Organizational Behavior and Human Decision Processes
|November 1, 1996
PubMed
Summary
This summary is machine-generated.

Related Concept Videos

You might also read

Related Articles

Articles linked to this work by shared authors, journal, and citation graph.

Sort by
Same author

Newcastle-on-Tyne Infirmary.

Provincial medical & surgical journal·2011
Same author

Thymocyte differentiation: a new way of thinking

Immunology today·2000
Same author

Synthesis, Structure, and Magnetism of a Novel Alkoxide Bridged Nonacopper(II) (Cu(9)O(12))

Angewandte Chemie (International ed. in English)·2000
Same author

A

Science (New York, N.Y.)·2000
Same author

Treatment of separation anxiety in dogs with clomipramine: results from a prospective, randomized, double-blind, placebo-controlled, parallel-group, multicenter clinical trial.

Applied animal behaviour science·2000
Same author

Illness and culture in the postmodern Age

BMJ (Clinical research ed.)·2000

People mentally depreciate expenses by spreading fixed costs over time or use. This can lead to over- or under-investment to maximize value, impacting decisions on durable goods and resource allocation.

Area of Science:

  • Behavioral Economics
  • Consumer Psychology
  • Decision Science

Background:

  • Individuals often incur fixed costs for durable goods.
  • Understanding how these fixed costs influence subsequent decisions is crucial.

Purpose of the Study:

  • To introduce and define the concept of "mental depreciation."
  • To investigate how mental depreciation affects marginal decision-making regarding expenses.

Main Methods:

  • Two studies examined cost spreading for durable goods.
  • A third study and two field studies analyzed marginal decision errors.

Main Results:

  • Mental depreciation can cause over-investment to "get one's money's worth."
  • It can also cause under-investment by inflating perceived marginal costs.

Related Experiment Videos

Conclusions:

  • Mental depreciation leads to systematic errors in evaluating expenses.
  • These errors impact how individuals utilize durable goods and make resource allocation decisions.