Consequences of Regret Aversion: Effects of Expected Feedback on Risky Decision Making

Abstract

Consequences of regret aversion: effect of expected feedback on risky decision making Zeelenberg, M.; Beattie, J.; van der Pligt, J.; de Vries, N.K. Published in:Organizational Behavior and Human Decision Processes DOI:10. 1006/obhd.1996.0013 Link to publication Citation for published version (APA):Zeelenberg, M., Beattie, J., van der Pligt, J., & de Vries, N. K. (1996). Consequences of regret aversion: effect of expected feedback on risky decision making. Organizational Behavior and Human Decision Processes, 65, 148-158. DOI: 10.1006/obhd.1996.0013 General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). Disclaimer/Complaints regulationsIf you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: http://uba.uva.nl/en/contact, or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible. Previous research has considered the question of how anticipated regret affects risky decision making. Several studies have shown that anticipated regret forces participants towards the safe option, showing risk-aversion. We argue that these results are due to the previous confounding of the riskiness of the options with the feedback received. Our design unconfounds these factors, and we predict that participants will always tend to make regret-minimizing choices (rather than risk-minimizing choices). We present three experiments using a "choices between equally valued alternatives'* paradigm. In these experiments we manipulate whether the risky or safe gamble is the regret-minimizing choice by manipulating which gamble(s) will be resolved. As predicted, participants tend to choose the regret-minimizing gamble in both gains and losses and in both relatively high risk and relatively low risk pairs of gambles. We consider the implications of these results for the role of regret in choice behavior.O IMS Academic Press, Inc.

Praise for regret: People value regret above other negative emotions

“…They value it in both an absolute sense (the favorable aspects outweigh the unfavorable aspects) and in a relative sense (as compared to other commonly experienced negative emotions). This is a surprising finding given the assumption of the aversiveness of regret, both tacit and implicit, that underlies much prior research, particularly work centering on biased decision-making (e.g., Bell 1982; Connolly and Butler 2006;Zeelenberg et al 1996). Indeed, recent depictions of the functional value of regret (e.g., Zeelenberg 1999;Zeelenberg and Pieters 2007) and the willingness of individuals to risk the experience of regret (van Dijk and Zeelenberg 2007) have been theoretically striking precisely because regret was previously assumed to be undesirable, both in terms of its biasing effect on rational decision-making and also its link to depression (Lecci et al 1994;Markman and Weary 1998;Monroe et al 2005).…”

“…Regret is additionally problematic because of its biasing effect on decision-making, an idea central to regret theories in economics (e.g., Bell 1982; Connolly and Butler 2006). At a more basic level, regret (like any negative emotion) is intrinsically aversive, hence individuals are motivated to avoid it, even if this means sacrificing an objectively superior reward (Zeelenberg et al 1996).…”

“…Regret is additionally problematic because of its biasing effect on decision-making, an idea central to regret theories in economics (e.g., Bell 1982; Connolly and Butler 2006). At a more basic level, regret (like any negative emotion) is intrinsically aversive, hence individuals are motivated to avoid it, even if this means sacrificing an objectively superior reward (Zeelenberg et al 1996).Although early depictions of regret emphasized various dysfunctional aspects, newer conceptions additionally have emphasized its functional basis, particularly in terms of triggering behavior change aimed at remediation (Landman 1993;Roese and Summerville Correspondence to: Neal J. Roese. Markman et al 2008;Roese 1994Roese , 1997.…”

Regret as autobiographical memory

“…This point was illustrated by Zeelenberg, Beattie, van der Pligt and de Vries (1996) in three hypothetical gambling experiments which also manipulated feedback about foregone alternatives. In each of three conditions participants could choose a risky or safe gamble and in all three conditions they expected to receive feedback about their chosen option.…”

Three studies on the neuroeconomics of decision-making when payoffs are real and negative

“…A number of experimental studies have found that regret does influence decision-making (Bleichrodt, Cillo, & Diecidue, 2007;Cooke, Meyvis, & Schwartz, 2001;Janis & Mann, 1977;Sorum et al, 2004;Wolfson & Briggs, 2002;Zeelenberg, 1999;Zeelenberg, Beattie, van der Pligt, & de Vries, 1996) and can explain various economic phenomena (Smith, 1996;Tsiros & Mittal, 2000;Braun & Muermann, 2004;Dodonova & Khoroshilov, 2005;Muermann, Mitchell, & Volkman, 2006;Cooke et al, 2001).…”