Effects of spikes in the price of gasoline on behavioral intentions: a mental accounting explanation

John Godek, Kyle Murray

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)

Abstract

In recent years, gasoline prices have spiked in response to world events, only to fall again within weeks or months. Anecdotal evidence suggests that these price fluctuations have a substantial impact on consumers' planned spending and their overall perceptions of financial well-being. We propose that consumers' behavioral intentions in response to these spikes are driven in part by how consumers mentally account for the fluctuations in gasoline prices. Specifically, we contend that people allocate sharp increases in the price per gallon of gasoline to a comprehensive mental account. As a result, such increases affect consumers' perceptions of their overall cost of living and have far-reaching effects on their planned spending. These predictions are tested in three experiments. The paper concludes with the discussion of a theoretical and applied implications of the results.

Original languageEnglish
Pages (from-to)295-302
Number of pages8
JournalJournal of Behavioral Decision Making
Volume25
Issue number3
DOIs
Publication statusPublished - Jul 2012
Externally publishedYes

Keywords

  • Consumer decision making
  • Mental accounting
  • Price framing
  • Price spikes

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