Mental Accounting for Multiple Outcomes: A Theoretical and Empirical Study

We develop a theoretical basis for integration and segregation of multiple outcomes with underlying S-shaped value functions. Our theoretical findings suggest that Thaler’ principles of mental accounting work as postulated when we deal with events having only positive outcomes (gains) or only negative ones (losses). In the case of ‘mixed’ events with positive and negative outcomes, determining preferences for integration and segregation is a complex task, whose thorough solution we provide in the case of three outcomes. This supplements the only so far in the literature developed case of two outcomes. Our theoretical research is illustrated with a number of examples, as well as weith an experimental study conducted in Changchun, Hong Kong, and Paris.