What Is Mental Accounting And Why Is It Important

Mental accounting is a behavioral economics term which states that treating money according to its source is irrational. Money you win and the money you have is all the same money.

However, if you treat the world as a series of bets on the condition of survival, then mental accounting is not just ration, but a necessity!

EconTalk · Nassim Nicholas Taleb on Rationality, Risk, and Skin in the Game · at 9:30 · March 25th, 2020 ·Transcript

On this episode

What Can Nassim Taleb Teach Us About Probabilities at 2:12
What Is The Most Effective Trading Strategy at 6:42
How Do You Gamble Without Losing Money at 8:47
What Is Mental Accounting And Why Is It Important at 9:30
How Can Something Safe Also Be Incredibly Risky at 16:26
Why Doesn't Nassim Taleb Like Gambling at 24:04
What Is The Rationality Of Religion at 25:30
What Is The Meaning Of "skin In The Game" at 40:44
How Did Losing Money Help President Trump Get Elected at 44:39
Who Should We Fail And Who Should We Bail at 46:41