The effect of benefit point perception on ideal spending mode and satisfaction

Abstract

Based on the theory of mental accounting, this research shows the effect of benefit point perception on the ideal spending mode and subsequent satisfaction in a flexible benefit plan context. More specifically, we find that individuals who perceive benefit points as bonus (vs. a part of yearly salary) consider exceptional (vs. ordinary) purchases as more ideal spending mode. Additionally, we find that individuals are more likely to spend benefit points on the purchases which are consistent with their ideal spending mode. Furthermore, the perceived fit between the ideal spending mode and the actual spending influences satisfaction with spending benefit points. In particular, individuals who perceive a higher fit between the ideal spending mode and the actual spending have a higher satisfaction.