$125, instead of a regular, out-of-pocket $5 cost. And as we can see from our value function, this V(-$125) – V(-$120) is smaller than V(-$5). This phenomenon is referred to as payment decoupling. Marketing Mental accounting is useful for marketers, in particular, as it makes useful predictions for how consumers will respond to different ways of presenting losses and gains. People respond more positively to incentives and costs when gains are segregated, losses are integrated, marketers segregate net losses (the silver lining principle), and integrate net gains. Automotive dealers, for example, benefit from these principles when they bundle optional features into a single price but segregate each feature included in the bundle (e.g., heated seats, heated steering wheel, mirror defrosters). Cellular phone companies can use principles of mental accounting when deciding how much to charge consumers for a new smartphone and to give them for their trade-in. When the cost of the phone is large and the value of the phone to be traded in is low, it is better to charge consumers a slightly higher price for the phone and return that money to them as a higher value on their trade in. Conversely, when the cost of the phone and the value of the trade-in are more comparable, because consumers are loss averse, it is better to charge them less for the new phone and offer them less for the trade-in. Public policy Mental accounting can also be utilized in public economics and public policy. Policy-makers and public economists would do well to consider mental accounting when crafting public systems, trying to understand and identify market failures, redistribute wealth or resources in a fair way, reduce the saliency of sunk costs, limiting or eliminating the Free-rider problem, or even just when delivering bundles of multiple goods or services to taxpayers. Inherently, the way that people (and therefore taxpayer and voters) perceive decisions and outcomes will be influenced by their process of mental accounting. If policy-makers consider the implications of how people mentally book-keep their decisions, they should be able to frame and construct public policy that results in better decisions for health, wealth, and happiness. A good example of the importance of considering mental accounting while crafting public policy is demonstrated by authors Justine Hastings and Jesse Shapiro in their analysis of the SNAP (Supplemental Nutritional Assistance Program). They "argue that these findings are not consistent with households