Too Proud to Stop: Regret in Dynamic Decisions

Abstract

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Learning to hesitate

“…In a recent study, Viefers and Strack (2014) find that regret plays a major role in an optimal stopping experiment. Regret, as defined by Loomes and Sugden (1986), captures the idea that agents are affected by the counterfactuals of their action (Bleichrodt and Wakker, 2015).…”

“…Their main result is that despite poor performance at the start of the experiment, the subjects learn "intuitive heuristics" to approximate the optimal behaviour. In follow-up experiments, Della Seta et al (2014) find that real option models' predictions with respect to risk aversion are supported, while Viefers and Strack (2014) find that subjects are not always consistent and adopt a behaviour suggesting regret. Our paper extends this type of research by investigating behaviour in a general case where the DM faces two possible prospects with unknown values and has to weigh the value of collecting additional information against the cost of this information.…”

When Choosing is Painful: A Psychological Opportunity Cost Model

“…The foundations of regret theory were essentially laid down by Bell (1982Bell ( , 1983, Sugden (1982, 1987), Sugden (1993) and Quiggin (1994). More recently, Bleichrodt and Wakker (2015) give a state-of-the art overview of the theory while Krähmer and Stone (2008) and Strack and Viefers (2014) address the issue of regret agents'decision process in a dynamic context.…”

Does uncertainty cause inertia in decision making? An experimental study of the role of regret aversion and indecisiveness

“…Although van de Ven and Zeelenberg's results are consistent with regret aversion, their account cannot explain my results with regard to the in ‡uence of anticipated regret on choice behavior. 4 Moreover, van de Ven and Zeelenberg's experimental design is not explicitly connected to formal theories of anticipated 3 Other studies that investigate whether anticipated regret a¤ects incentivized choices are Filiz-Ozbay and Ozbay (2007); Katušµ các, Michelucci, and Zajíµ cek (2015); and Strack and Viefers (2015). Filiz-Ozbay and Ozbay (2007) and Katušµ các, Michelucci, and Zajíµ cek (2015) conduct laboratory experiments to test whether the anticipation of regret a¤ects bidding behavior in one-shot …rst-price sealed-bid auctions.…”