Behavioural Finance
Mental Accounting
Definition
What is Mental Accounting?
Treating money differently based on arbitrary labels or sources.
Example in practice
How This Looks in Practice
An investorA person or organisation that commits capital with the expectation of a financial return. gambles a bonus while guarding salary savings, even though both are money.
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Related Terms
Behavioural Finance
Loss Aversion
The tendency to feel losses more strongly than equivalent gains.
Behavioural FinanceOverconfidence Bias
The tendency to overestimate one's knowledge, forecasting ability, or control.
Behavioural FinanceConfirmation Bias
The tendency to seek or interpret information that supports an existing belief.
Sustainable InvestingESG Investing
Incorporating environmental, social, and governance factors into investment analysis or ownership.