Mental accounting

Treating the same portfolio money differently by mental «label».

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Mental accounting (Thaler) is mentally splitting capital: «casino money», «untouchable profit», «recovery capital» — with different rules per bucket.

In plain terms — One euro is one euro, but you do not treat it that way. Can lead to holding losers in the «recovery» bucket and risking wins in the «bonus» bucket.

prospect-theory · operating-capital · psicologia