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Regret in the Small and in the Large

Author

Listed:
  • Sushil Bikhchandani

    () (UCLA Anderson School of Management)

  • Uzi Segal

    () (Boston College)

Abstract

We propose a model of local-regret behavior that allows the separation of regret behavior between random variables that are close to each other and between random variables that are far apart. This enables a reinterpretation of evidence related to intransitive behavior in the laboratory. When viewed through this paper’s analysis of regret, the laboratory evidence need not imply intransitive behavior for large risky decisions such as investment choices and insurance.

Suggested Citation

  • Sushil Bikhchandani & Uzi Segal, 2018. "Regret in the Small and in the Large," Boston College Working Papers in Economics 964, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:964
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    References listed on IDEAS

    as
    1. Michael Birnbaum & Ulrich Schmidt, 2008. "An experimental investigation of violations of transitivity in choice under uncertainty," Journal of Risk and Uncertainty, Springer, vol. 37(1), pages 77-91, August.
    2. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Regret; intransitivity; preference reversal;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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