Below is the title and abstract for this week's LJDM talk.
LJDM seminars are held Wednesdays at 5:00 in Room 313 at the UCL
Psychology Department, 26 Bedford Way WC1H 0AP.
The full schedule is at http://ljdm.info/talks.php
Wednesday, 01 June, 5 PM:
Johannes Abeler
University of Nottingham
Fungibility, Labels, and Consumption
Fungibility of money is a central assumption in the theory
of consumer choice: any unit of money is substitutable for
another. This implies that the composition of income or
wealth is irrelevant for consumption. We find in a field
experiment that even in a simple, incentivized setup many
subjects do not treat money as fungible. When a label is
attached to a part of their budget, subjects change
consumption according to the label. A controlled laboratory
experiment confirms this result and further shows that
subjects with lower cognitive abilities are more likely to
violate fungibility. The findings lend support to behavioral
models of narrow bracketing and mental accounting.
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