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Searching to avoid regret: An experimental evidence

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  • Jhunjhunwala, Tanushree

Abstract

When faced with many options, individuals generally gather information prior to choosing. In this study, I identify the role of post-decision feedback on quality of missed alternatives, which can induce regret in decision-making, to explain the extent to which people would search. I isolate the effect of feedback on search levels cleanly by means of an abstract lab experiment set in a sequential search environment. The feedback levels vary across treatments. I find that individuals not only have higher reservation values that lead them to sample more options in the presence of this regret-inducing feedback, but their reservation values also decline less slowly over time in the presence of said feedback. Thus, the presence of feedback on forgone alternatives induces decision-makers to exhibit higher search intensities, indicating the important role played by regret aversion in search environments.

Suggested Citation

  • Jhunjhunwala, Tanushree, 2021. "Searching to avoid regret: An experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 298-319.
    • Handle: RePEc:eee:jeborg:v:189:y:2021:i:c:p:298-319
    DOI: 10.1016/j.jebo.2021.06.036
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    More about this item

    Keywords

    Regret; Information feedback; Sequential search;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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