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An economic definition of ‘Fear of Missing Out’ (FOMO)

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  • Kaddouhah, Mohammed

Abstract

This research note proposes a decision theoretic definition of the popular phenomenon of Fear of Missing Out (FOMO). Our definition assumes that FOMO causes individuals to base their decision-making utility on their own anticipated regret and the decisions made by individuals in their social peer group. We use an example related to asset trading in order to illustrate how to analyse decision-making under FOMO preferences and to highlight differences with the concept of regret aversion.

Suggested Citation

  • Kaddouhah, Mohammed, 2024. "An economic definition of ‘Fear of Missing Out’ (FOMO)," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s154461232400374x
    DOI: 10.1016/j.frl.2024.105344
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    References listed on IDEAS

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    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
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    More about this item

    Keywords

    Anticipated regret; Fear of Missing Out; FOMO; Financial decision-making;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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