Regret Before the Choice: How Fear Shapes Our Decisions

Read this blog post to learn more about:

• Why people fear future regret more than past mistakes

• How anticipated regret quietly pushes us toward “safer” decisions

• The role of counterfactual thinking in amplifying feelings of regret

• Why traditional economic models fail to explain real human choices

• How understanding regret can help you make more confident decisions

Humans are faced with decisions on an everyday basis‚ from ordinary decisions (what to purchase) to life-altering decisions (which university to attend‚ which profession to enter‚ whether to enter a romantic relationship)‚ and regret is one of the main drivers of the decision-making process (Zeelenberg, 1999)․ Regret theory explains how people attempt to avoid making a "wrong" decision by anticipating the regret associated with that decision․ The concept has been applied to anticipated regret‚ counterfactual thinking‚ and economic models of behavior‚ and has implications for the decision-making process (Loomes & Sugden, 1982)․

Anticipated regret refers to the anticipation that an individual may feel regret about the result of a decision in the future․ Anticipated regret theory suggests that decision making is not only determined by the potential positive outcomes‚ but also by the potential negative outcomes including feelings of regret (Zeelenberg, 1999)․ An example of anticipated regret is that of a student confronted with a choice between a 'safer' university option‚ and a more risky university option which would give them more opportunity․ If the student anticipates regretting their decision should they fail‚ they will choose the safer option‚ despite the opportunity cost․ Regret could thus be thought of as a cost that is paid together with the monetary or practical costs․ Evidence suggests that anticipated regret is more powerful than experienced regret since people try to avoid costs that they would incur in the future before they become present costs (Zeelenberg, 1999)․

Anticipated regret is related to counterfactual thinking‚ in which someone simulates alternatives to the facts as they are‚ or imagines that the decision had turned out differently‚ e․g․‚ "What if I had chosen differently?" or "Things would have been better if I had not done that"․ Counterfactually thinking increases regret (Roese, 1997)․ This is because counterfactual thinking stresses that negative outcomes were avoidable․ For example‚ a person who narrowly misses a train will feel more regret than a person who missed a train by a wide margin‚ because it is easier for a person to imagine the negative outcome being better․ Thus‚ the level of regret a person feels depends not only on the outcome but also on the person's perceived distance from the better outcome (Roese, 1997)․

Excessive counterfactual thinking can have negative consequences‚ including preventing individuals from accepting the error‚ moving on from it‚ and feelings of anxiety and dissatisfaction with outcomes․ On the other hand‚ reflecting on the reasons for a decision that has been made‚ can be a source of learning to improve future decisions․ If counterfactual thinking is based on emotions rather than reason‚ it can lead to false evaluations of decisions and anxiety about making future decisions (Roese, 1997)․ People who fear regret may be afflicted by decision paralysis‚ choosing to not act to avoid future regret․

The standard models of rationality and economic agents are grounded in utility maximization only‚ and economic models of regret challenge this by allowing for emotional factors influencing decisions (Zeelenberg, 1999)․ Regret theory was created as an alternative to expected utility theory․ This suggests that people will compare the decision they have made with the decision they could have made‚ and if the decision they did not make would have led to a better outcome‚ it would lead to regret and negatively impact their utility․ As a result‚ they would try to minimize what they might come to regret (Loomes & Sugden, 1982)․

Behavioral economists such as Daniel Kahneman and Amos Tversky have re-stressed the observation that human behavior is seldom rational and‚ instead‚ is subject to the influence of emotions‚ cognitive biases‚ and psychological framing (Roese, 1997)․ Regret-based models can explain consumer inertia‚ unwillingness to sell declining stock positions‚ or unwillingness to change jobs throughout a career‚ because of the role of regret in driving such decisions (Zeelenberg, 1999)․

To summarize‚ regret theory explains why people fear making an incorrect decision when anticipated regret causes risk dislike‚ counterfactual thinking causes anticipated regret to be increased‚ and economists are convinced that people do not choose rationally․ Even though regret may help avoid bad decisions, the analysis of regret theory is useful for people to become aware of situations in which their decision is affected by regret, and avoid avoidance behavior, and more reasonably weigh the costs and benefits of risky decisions.

References

Zeelenberg, M. (1999). Anticipated regret, expected feedback and behavioral decision making. Journal of Behavioral Decision Making.

Roese, N. J. (1997). Counterfactual thinking

Loomes, G. & Sugden, R. (1982). Regret theory: An alternative theory of rational choice under uncertainty