Mental Accounts and the Marginal Willingness to Share

Published:

Recommended citation: Clingingsmith (2017). "Mental Accounts and the Marginal Willingness to Share" Unpublished Ms.

This study investigates whether the neoclassical model or mental accounting better describes how earned and windfall income are treated in sharing decisions. Participants play a dictator game after earning income in real-effort task and/or receiving a windfall. I find that dictators treat marginal earned and windfall income as partially infungible, which supports mental accounting. Two-step estimates show that sharers shared 15% of a marginal windfall token and 7% of a marginal earned token. Strikingly, sharers who had income from both sources were sharply less generous with both earned and windfall income than those who had only a single source. This aspect of mental accounts has thus far received little attention. A follow-up experiment shows that two accounts must qualitatively different, not just multiple in number, to induce more selfishness.

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