Does our desire to avoid regret affect how we make decisions?

An interesting paper for the nerds among you.

Regret is a negative experience that most of us would rather avoid. In decision making, regret can stem from comparing actual outcomes to outcomes that might have happened had we made different choices.

Interestingly, some research has shown that ‘experienced' regret affects subsequent decisions. After experiencing regret, in one study, for example, we tend to prefer high probability, low payoff options to low probability, high payoff options. In other studies experienced regret influenced subsequent purchase decisions and led to changing products/brands. These studies demonstrate the effect of experienced regret on subsequent decisions was domain specific. According to the authors of the paper below, “purchasing a specific product was found to affect subsequent purchases of the same product.”

Recently there has been some evidence that the effects of experienced regret could impact us more generally affecting decisions in other domains.

So how can we explain this?

Intuitively, the most straightforward explanation of domain-specific effects would be that we're making a decision and learning not to repeat our mistakes (through some sort manifestation of feedback). The result is a change in behavior.

If you assume the feedback in this case is emotional then the experience of regret could, as the authors of the paper below (Raeva, Dijk, & Zeelenberg) say, “sensitize decision makers to future experiences of regret, and increase their motivation to avoid (anticipated) regret. Rather than concluding that they do not want to make the same mistake twice, decision makers may reason that they do not want to experience the same negative emotion twice.

The authors explore the possibility that the experience of regret is because we we compare “what is” to “what could have been.” This comparing of possible decision outcomes, is, as they contend, essential to the experience of regret: “while there is no regret without a comparison, there can be comparison without regret.

To study this they investigated how feedback over decisions outcomes affect future decisions by manipulating feedback. If people receive feedback over the outcomes they obtained (“factual outcomes”) and the outcomes they would have obtained had they made different choices, they become regret averse in subsequent decisions. They found that this effect is observed in both cases: where feedback evoked regret and where there was no regret. These findings suggest, at least partly, that our comparative mind (comparing what was to what could have been), at least partially, plays some role in our future choices.

Source: How comparing decision outcomes affects subsequent decisions: The carry-over of a comparative mind-set