Joshua is tired of school as well as his part-time job and decides on the spur of the moment to take a weekend trip to Cabo San Lucas.He pays for it with his credit card,rather than with money from his checking account.Which type of irrational behavior does this BEST represent?

A) status quo bias
B) mental accounting
C) loss aversion
D) risk aversion

Question

Brandon Fajardo · Accepted Answer

Final Answer : B, Explanation :  Joshua is exhibiting mental accounting because he is treating the credit card as a separate account from his checking account, even though it will still require payment later on. He is not considering the long-term consequences of using credit card debt to pay for expenses in the short-term.

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