The Role of Experienced Regret on Intertemporal Choice: An Experiment
AbstractTheoretical and empirical body of research have exposed the powerful role of experiencing regret in guiding choice behavior. In this paper, we examined the impact of experienced regret and rejoicing induced by feedback provided on a risk decision prior to a two-period intertemporal choice. To our knowledge, this is the first attempt to bring together experienced regret and choice over time. We used the two-component discounted utility model approach as a framework. We applied previous research findings on the effect of experienced regret on utility, and we performed an experiment to test whether experienced regret and rejoicing have an impact on the discount factor. We found that both experienced regret and rejoicing have an impact on the way people discount future: when regret is experienced the discount factor decreases, whereas when rejoicing is experienced the discount factor increases.
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Bibliographic InfoPaper provided by Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia in its series CEEL Working Papers with number 0804.
Date of creation: 2008
Date of revision:
intertemporal choice; regret theory;
Find related papers by JEL classification:
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-17 (All new papers)
- NEP-CBE-2008-05-17 (Cognitive & Behavioural Economics)
- NEP-DCM-2008-05-17 (Discrete Choice Models)
- NEP-EXP-2008-05-17 (Experimental Economics)
- NEP-UPT-2008-05-17 (Utility Models & Prospect Theory)
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