The principle of distribution of profits – theory and reality. Behavioral economics in practice

Authors

DOI:

https://doi.org/10.26485/SPE/2021/118/17

Keywords:

mental accounting, behavioral economics, Richard Thaller

Abstract

Background: The research subject was one of the theories of Richard Thaller, which belongs to mental accounting, one of the issues of behavioral economics. Mental accounting generally shows people’s attitudes to profit and loss. Richard Thaller created four rules of his theory. The article focuses on one of the rules of this theory, the rule of distribution incomes, which says that people are more satisfied with several smaller incomes than with one larger, which is the sum of the smaller ones.

Research purpose: The research goal was to check if the rule of distributing incomes is used to a group of people randomly selected.

Methods: The research was made using a survey method, which was available online on 9–20.04.2020. 156 respondents took part in the survey. The respondents were chosen randomly. The survey consisted of seven questions. Three of them referred to the respondents, the others described various life situations, which was described the distribution of incomes. The respondents were grouped according to gender, age and education. Then, in each of the four described situations, they answered exactly the same question, if they prefer several smaller incomes or one larger being the sum of the smaller ones.

Conclusions: The results of the research showed that randomly selected renspodents prefer one larger income being the sum of smaller incomes than several smaller incomes of exactly the same value. The same results were confirmed by respondents regardless of gender, age or education. The results may have been affected by the situation during the tests were performed. This time was the beginning of quarantine during a worldwide coronavirus pandemic. In addition, Polish people used to receive incomes no more than once a month, which also could have had a meaning.

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Published

2021-05-13

How to Cite

Śmigielska, D., & Grabarczyk, E. (2021). The principle of distribution of profits – theory and reality. Behavioral economics in practice. Studia Prawno-Ekonomiczne, 118, 321–340. https://doi.org/10.26485/SPE/2021/118/17

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Section

ARTICLES - THE ECONOMICS