Regret and the rationality of choices

Abstract

Regret helps to optimize decision behaviour. It can be defined as a rational emotion. Several recent neurobiological studies have confirmed the interface between emotion and cognition at which regret is located and documented its role in decision behaviour. These data give credibility to the incorporation of regret in decision theory that had been proposed by economists in the 1980s. However, finer distinctions are required in order to get a better grasp of how regret and behaviour influence each other. Regret can be defined as a predictive error signal but this signal does not necessarily transpose into a decision-weight influencing behaviour. Clinical studies on several types of patients show that the processing of an error signal and its influence on subsequent behaviour can be dissociated. We propose a general understanding of how regret and decision-making are connected in terms of regret being modulated by rational antecedents of choice. Regret and the modification of behaviour on its basis will depend on the criteria of rationality involved in decision-making. We indicate current and prospective lines of research in order to refine our views on how regret contributes to optimal decision-making.

Regret Theory: A Bold Alternative to the Alternatives

“…Although LS are firm on a normative status of regret theory and provide strong and cogent arguments, the authors of this comment have different views. LS argue that feelings of regret are a fact of life and that it is irrational to ignore them, a view supported by Bourgeois‐Gironde () using neurodata. We are less tolerant and more paternalistic about such feelings.…”

An Allais paradox without mental time travel

“…From the perspective of normative economic theory, such behavior is paradoxical because it violates the substitution axiom, one of the fundamental principles of expected utility theory (Allais, ; MacCrimmon and Larsson, ). However, Loomes and Sugden showed mathematically that if one makes certain assumptions about anticipation of regret and/or rejoicing following an actual outcome, then expected utility theory can explain the certainty effect, the common ratio effect, and a number of other violations of expected utility theory (e.g., Bell, ; Laciana and Weber, ; Bourgeois‐Gironde, ).…”

Overcoming Learning Aversion in Evaluating and Managing Uncertain Risks

“…These include making decisions with low potential for regret to protect damaging already low self‐esteem, as well as preferring to avoid learning outcomes in order to avoid possible regrets. From a biological perspective, it has been proposed that the emotion of regret, when used as an error signal to adaptively modify decision rules in individual decision making, is a “rational emotion” that helps us to learn and adapt decision making effectively to uncertain and changing environments (e.g., Bourgeois‐Gironde). Although psychological and biological aspects of regret are important for some kinds of decision making under risk, it is primarily proposed concepts of rational regret, as just discussed, that we believe can be most useful for improving the practice of BCA.…”