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How might a company take advantage of consumers’ mental accounting? Give examples.

Consumers’ choices are prey to subtle discrepancies that  arise in cognitive accounting. Learning how and when you are prey to  these discrepancies is an important step in improving your decision  making.

As the readings for this module demonstrate, people  value gains and losses differently under different scenarios. For  example, contestants in a game show might choose a guaranteed $10 prize  over a 50 percent chance of winning $20 despite the fact that the  expected values are the same.

Using the readings for this module, the Argosy University online library resources, and the Internet, address the following:

  • What is mental accounting and how does it impact consumer decision making?
  • How might a company take advantage of consumers’ mental accounting? Give examples.
  • As a marketer, how might you frame certain decisions to benefit from the disparities that arise in one’s cognitive accounting?
  • As a consumer, how would you avoid the pitfalls posed by the inequalities of one’s cognitive accounting?

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