Regret once, think twice: the impact of experienced regret on risk choice
AbstractWe examine the behavioral consequences of experienced regret on subsequent choice. Previous experimental research findings suggest that the impact of experienced regret on repeating subsequent choice is mediated by the anticipation of experiencing regret again. We argue that this impact is due to a mechanism linked to the subjective probability to regret in the subsequent choice. We conducted an experiment to test whether this hypothesis can be generalized to the case where the subsequent choice is different than the preceding one. Participants were presented with a sequence of two different decision tasks: a choice between two risky gambles followed by a matching task. To induce experienced regret, we provided two different types of feedback on the gambles: non-regret and regret feedbacks. To gain insights to the role of anticipated regret in mediating the effect of experienced regret, we also introduced two different types of feedback on the matching task: partial and complete feedback. We found that prior experienced regret and complete feedback on the subsequent choice should be both present for a change in behavior in the subsequent different choice. To interpret our results, we provide analytical considerations based on our hypothesis of changed subjective probability to regret, consistent with the observed behavior.
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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 0903.
Date of creation: 2009
Date of revision:
risk 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
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-13 (All new papers)
- NEP-CBE-2009-04-13 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-04-13 (Experimental Economics)
- NEP-UPT-2009-04-13 (Utility Models & Prospect Theory)
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