He talks about how this is called by creating different mental accounts. However, Kahneman writes in “Thinking, Fast and Slow” that it is more rational to only have one mental account for all incomes and expenses. In this case people wouldn’t make the mistake of having savings in one account and credit card debt in the other.
Agreed! I only want to add the reference to Tversky and Kahneman’s original study which you are talking about: The Framing of Decisions and the Psychology of Choice. The 10$ experiment is on page 457.
He talks about how this is called by creating different mental accounts. However, Kahneman writes in “Thinking, Fast and Slow” that it is more rational to only have one mental account for all incomes and expenses. In this case people wouldn’t make the mistake of having savings in one account and credit card debt in the other.