Adonis Diaries

House-Money effect: Money is not neutral, it is not naked. Money is colorful and emotional

Posted on: September 29, 2014

House-Money effect: Money is not neutral, it is not naked and it is colorful

Do you think money is money?

Are cash money, checks, traveler checks, stocks, bonds… equivalent?

Is the money you saved from hard work equivalent in value from what you find in the street?

Is money inherited similar in value from hard work?

Which kind of money you tend to spend quickly, swiftly and on unnecessary items?

Does the emotional shroud adds value to money?

Does money earned in a lottery ticket change your decisions when compared to hard earned money?

Which kinds of money gives you this urge to take a postponed long vacation? Or to improve your property?

Suppose you won $1,000 on a roulette game and then lost it. How great is your regret and suffering? I guess it won’t last long compared to hard earned saving.

Here is an experiment:

Two groups are randomly selected. Group A is given $30 in cash and then asked to bet: You win $9 if head or lose $9 if tail in a coin toss.

Group B is not offered any money. The subjects are told that they will receive $30 or take part in a coin tossing. The subject win $39 if head or $21 if tail.

Which group felt incited to gamble? 70% of Group A gambled compare to 43% in group B. Why?

The expected value is the same, but group A got readily in hand $30?

Marketing strategists expect to benefit from your sheer exuberance by rewarding you with upfront cash money if you apply to their programs (credit cards, airlines, phone companies…).

Eventually, you’ll quickly spend the money and accrue exorbitant interest rates on your credit card.

For the same expected value, which money you prefer: cash money, checks, traveler checks, stocks, bonds, inheritance, lottery…?

Does the term “added value” is of purely a monetary connotation?

 

 

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