What mental accounts do you have in your mind about purchasing products and services? Do you have any rules you employ in spending money? Are they different from what other people do? Do you follow Thaler's four principles in reacting to gains and losses?

Mental accounting is the set of cognitive operations used by consumer to code, categorize and evaluate financial outcomes of choices. Researchers have found the consumer handling their money by using mental accounting.

While purchasing product and services I have following mental accounts in my mind:

·Product importance and its need: Before buying the product, the very first thing I see is the need of that product and its importance in my life and accordingly I'll make the decision of buying.

·Quality: I will also see at the product quality. If it meet the standard quality of what I am looking in that product and make the decision of buying it.

·Price:I'll also look at the price, see it reasonable or not so that I could afford, or is the price is set as per its quality and is it worth to buy in that amount, and make the decision accordingly.

·Availability:While purchasing I'll also see whether that product is easily available or not and what kinds of products of which brands are available in the market.

·Warranty and guarantee:While buying an expensive product I'll make sure to see whether it offers any warranty and guarantee for that product and if it offers any maintenance services and make purchase considering these points.

I buy any product which I need most urgently at first and the less priority product I purchase it later. But I do compare the quality with the price, whether it is worth paying that amount of money to that kind of quality or not. Otherwise, I do not have any strict rules while spending money. As different people have different needs and perceptions for the products so the rules for spending money does vary with other people.

According to Richard Thaler, mental accounting is based on a set of key core principles. They are:

·Consumers tend to segregate gains

·Consumers tend to integrate losses

·Consumers tend to integrate smaller losses with larger gains

·Consumers tend to segregate small gains from large losses

Yes, I do follow Thaler's four principles in reaching to gain or losses while purchasing expensive products so as to make sure that I get the maximum utility for the money which I spend.

Reference: 

Keller, Philip Kotler and Kevin Lane. (2006). Marketing Management (12 ed.). New Jersey: Prentice Hall.