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Regret aversion and the reluctance to exchange lottery tickets

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  • van de Ven, Niels
  • Zeelenberg, Marcel

Abstract

The current research finds that people are willing to forego a direct material gain, if that protects them from future regrets. In two experiments participants endowed with a lottery ticket were offered to exchange their ticket for another ticket from the same lottery. Even though they could receive a bonus for exchanging, many participants chose not to do so. Experiment 1 finds that a manipulation that prevented the anticipation of regret by offering the ticket in a sealed envelope made more participants exchange their ticket. Experiment 2 finds that an increased potential of regret over not-exchanging made more participants exchange as well. In both experiments the effect of the manipulation on choices is mediated by anticipated regret. The experiments show that people are willing to forego a material gain to prevent future regrets and that the reluctance to exchange lottery tickets is (partly) caused by regret aversion.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 32 (2011)
Issue (Month): 1 (February)
Pages: 194-200

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Handle: RePEc:eee:joepsy:v:32:y:2011:i:1:p:194-200

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Regret Anticipated regret Emotions Decision making Lottery Reluctance to exchange;

References

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  1. Starmer, Chris & Sugden, Robert, 1993. " Testing for Juxtaposition and Event-Splitting Effects," Journal of Risk and Uncertainty, Springer, vol. 6(3), pages 235-54, June.
  2. Knetsch, Jack L & Sinden, J A, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 507-21, August.
  3. Larrick, Richard P. & Boles, Terry L., 1995. "Avoiding Regret in Decisions with Feedback: A Negotiation Example," Organizational Behavior and Human Decision Processes, Elsevier, vol. 63(1), pages 87-97, July.
  4. Humphrey, Steven J., 2004. "Feedback-conditional regret theory and testing regret-aversion in risky choice," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 839-857, December.
  5. David E. Bell, 1983. "Risk Premiums for Decision Regret," Management Science, INFORMS, vol. 29(10), pages 1156-1166, October.
  6. Zeelenberg, Marcel & van Dijk, Eric, 1997. "A reverse sunk cost effect in risky decision making: Sometimes we have too much invested to gamble," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 677-691, November.
  7. Ritov, Ilana, 1996. "Probability of Regret: Anticipation of Uncertainty Resolution in Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 66(2), pages 228-236, May.
  8. Hoelzl, Erik & Loewenstein, George, 2005. "Wearing out your shoes to prevent someone else from stepping into them: Anticipated regret and social takeover in sequential decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 98(1), pages 15-27, September.
  9. Zeelenberg, M. & Pieters, R., 2004. "Consequences of regret aversion in real life: The case of the Dutch postcode lottery," Open Access publications from Tilburg University urn:nbn:nl:ui:12-126233, Tilburg University.
  10. Zeelenberg, Marcel & Beattie, Jane & van der Pligt, Joop & de Vries, Nanne K., 1996. "Consequences of Regret Aversion: Effects of Expected Feedback on Risky Decision Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 65(2), pages 148-158, February.
  11. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-24, December.
  12. Ritov, Ilana & Baron, Jonathan, 1995. "Outcome Knowledge, Regret, and Omission Bias," Organizational Behavior and Human Decision Processes, Elsevier, vol. 64(2), pages 119-127, November.
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Citations

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Cited by:
  1. Shalvi, Shaul & Reijseger, Gaby & Handgraaf, Michel J.J. & Appelt, Kirstin C. & ten Velden, Femke S. & Giacomantonio, Mauro & De Dreu, Carsten K.W., 2013. "Pay to walk away: Prevention buyers prefer to avoid negotiation," Journal of Economic Psychology, Elsevier, vol. 38(C), pages 40-49.
  2. Emmanuel PETIT (GREThA, CNRS, UMR 5113) & Anna TCHERKASSOF (LIP/PC2S) & Xavier GASSMANN (INRA), 2011. "Anticipated regret and self-esteem in the Allais paradox," Cahiers du GREThA 2011-25, Groupe de Recherche en Economie Théorique et Appliquée.
  3. Giorgetta, Cinzia & Zeelenberg, Marcel & Ferlazzo, Fabio & D’Olimpio, Francesca, 2012. "Cultural variation in the role of responsibility in regret and disappointment: The Italian case," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 726-737.
  4. Kogler, Christoph & Kühberger, Anton & Gilhofer, Rainer, 2013. "Real and hypothetical endowment effects when exchanging lottery tickets: Is regret a better explanation than loss aversion?," Journal of Economic Psychology, Elsevier, vol. 37(C), pages 42-53.

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