Clinging to Slim Chances: The Dynamics of Anticipating Regret When Developing New Products

Abstract

This paper focuses on the effects of anticipated regret during large‐scale investment projects—namely new product development. Anticipated regret means worrying about the future, and decision‐makers experience it prior to both making a decision and knowing the outcome of that decision. It is forward‐looking while actual regret is backward‐looking. Decision‐makers must make project continuation/termination decisions with conflicting pressures. If they continue it, they might receive disconfirming information in the future and therefore regret their decision. If they stop it, they also might regret that decision later, too, if they subsequently conclude it was an error to do so. We term these conflicting pressures anticipated “keep” and “drop” regret, respectively. In the main study, nearly 300 individuals completed a decision‐making exercise in which a failing new product development project was evaluated, and various factors were measured, including both types of anticipated regret at multiple points in the project. The results show that decision‐makers anticipate regret when making project continuation decisions, and anticipated keep and drop regret exert pressures that differ in direction and magnitude. Most interestingly, anticipated drop regret does not diminish as the failing project progresses whereas anticipated keep regret increases as more negative information is received over the course of the project. A second, smaller study was conducted using a different population, and the results of the main study were replicated in this supplemental study, thereby adding confidence in these findings.

Mitigating Negative Side Effects of Innovation Project Terminations: The Role of Resilience and Social Support

“…Despite the obvious importance of this aspect, research on the human cost of innovation project terminations is still in a nascent stage (Moenkemeyer et al, 2012). Most research dealing with innovation project terminations focuses on when and how such a termination should occur (Patzelt, Lechner, and Klaukien, 2011;Sarangee, Schmidt, and Wallman, 2013), for example, by examining factors underlying escalation of commitment (Behrens and Ernst, 2014;Sarangee, Woolley, Schmidt, and Long, 2014;Schmidt and Calantone, 2002). Only a few researchers, in particular Shepherd, Patzelt, and colleagues, have explicitly addressed the negative side effects of terminating innovation projects on the involved individuals that might counteract the intended positive effects behind the termination decisions (Corbett et al, 2007;Shepherd et al, 2011Shepherd et al, , 2013Shepherd et al, , 2014V€ alikangas et al, 2009).…”

Early termination of R&D projects

“…Project termination is one of the most difficult decisions in a company (Balachandra & Raelin, 1984;Balachandra, 1984Balachandra, , 1996Cooper & Edgett, 2012;Cooper, 2009a;Sarangee, non-routine characteristics. Routine decisions can rely on a great amount of data in a wellknown environment, making the forecasting more precise.…”

“…Emotions also play a vital role on this subject. Early termination is surrounded by a very peculiar phenomenon called the "anticipation of regret" (Sarangee et al, 2013). Actual regret is backward looking, while the anticipated regret is forward-looking.…”

Impacts of consumer regrets on product demos and pricing strategy in new product release

“…Anticipated regret is a negative emotion generated when individuals believe that they could have achieved a better outcome had they made a different choice. The effect of anticipated regret on decision‐making has been studied in various fields, such as experimental psychology (Zeelenberg, 1999), auction (Engelbrecht‐Wiggans & Katok, 2008), new product development (Sarangee et al, 2013), and operations (Bell, 1982; Perakis & Roels, 2008; Yang et al, 2019). The extant literature (e.g., Lemon et al, 2002; Loomes & Sugden, 1982; Simonson, 1992; Zeelenberg & Pieters, 2007) has also found that anticipated regret affects consumers' purchase decisions, that is, consumers may ex ante make their choices to minimize or alleviate the potential post purchase regret anticipated before purchasing.…”