Toward a positive theory of consumer choice
Thaler's 1980 paper is one of the founding documents of behavioural economics. Its purpose is to collect systematic departures from the standard economic model of the consumer and show that they are patterned rather than random. Among them are the endowment effect, the finding that people demand considerably more to give up something they own than they would have paid to acquire it, and the treatment of sunk costs as relevant to current decisions. The paper also sets out the beginnings of mental accounting, the idea that people sort money into separate notional accounts rather than treating it as interchangeable, which explains why the same sum feels different depending on which pocket it came from. The framework was built on prospect theory and made the psychology of decision usable by economists. This page describes the model from public material, because no abstract of the 1980 paper is publicly available.
Thaler's 1980 paper is one of the founding documents of behavioural economics. Its purpose is to collect systematic departures from the standard economic model of the consumer and show that they are patterned rather than random. Among them are the endowment effect, the finding that people demand considerably more to give up something they own than they would have paid to acquire it, and the treatment of sunk costs as relevant to current decisions. The paper also sets out the beginnings of mental accounting, the idea that people sort money into separate notional accounts rather than treating it as interchangeable, which explains why the same sum feels different depending on which pocket it came from. The framework was built on prospect theory and made the psychology of decision usable by economists. This page describes the model from public material, because no abstract of the 1980 paper is publicly available.
Written from the public account of the model this paper introduced.
What our sources record
Reproduced as it was written when this source was checked, figures and all.
Section 4, pp. 47-49, names the sunk cost effect and states the hypothesis. Full text read 2026-09-02.
Where we use it
- Why You Finish the Series You Stopped Enjoying, Why We Act
Reliability of this reference
The link below was matched against the publisher's record on title, first author and year, and all three agree.
The source
https://doi.org/10.1016/0167-2681(80)90051-790051-7)
DOI: 10.1016/0167-2681(80)90051-7