Regret Aversion

Regret Aversion (We do we consider regret before we make a decision?)

The regret aversion, a brief explanation

What is the regret aversion?

Regret aversion is the tendency to make a decision to avoid regretting an alternative decision (or inaction in the future).

Example

When watching television late at night you may make the decision to purchase something that you wouldn’t otherwise buy through a fear of missing out on the purchase.

The literature

Hayashi, T. (2008). Regret aversion and opportunity dependence. Journal of Economic Theory, 139(1), 242-268. Doi: 10.1016.j.jet.2007.07.001

Zeelenberg, M., Beattie, J., Plight, J. & Vries, N. K. (1996). Consequences of regret aversion: effects of expected feedback on risky decision making, Organizational Behavior and Human Decision Prcoesses, 65(2), 148-158. Doi: 10.1006/obhd.1996.0013.