Theoretical 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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Paper provided by Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia in its series CEEL Working Papers with number
0804.
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 and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
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