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Regret and decision making: Why do we always want to avoid missing the best option?
In our daily lives, making choices is often accompanied by uncertainty. When we make a decision and new information reveals that it was not the best choice, we may experience an emotion called regret. This emotion not only affects our psychological state, but may also affect our future decision-making.
The emotion of regret is an integral part of the human learning process and is important to how we deal with risk.
According to regret theory, when people make decisions, they usually make mental calculations about possible alternatives to predict the possible degree of regret. This theory was proposed by a number of scholars in 1982 and has since been continuously improved and revised. Regret is undoubtedly a negative emotion that is closely related to social reputation and has a profound impact on our behavioral choices.
Regret and Anticipated RegretInterestingly, the “anticipated regret” we feel when making a choice is often stronger than the regret we actually experience. Research shows that when people predict outcomes that they don’t achieve, they often exaggerate their anticipated regret. For example, a commuter might expect to feel more regret for missing a train by one minute than for missing it by five minutes, but in reality the levels of regret they experience are not the same.
This shows that people's psychological assessment of failure is often far from their actual experience, which may lead to wrong behaviors and choices.
When faced with possible choices, we often choose the conservative option to reduce the risk of regret. For example, when a person is faced with a choice that guarantees a $40 gain, they may forgo some potential higher gains to avoid future regret, a behavior that is directly related to the psychology of “loss avoidance.”
Experimental evidence for regret
Many experimental studies have shown that the emotion of regret can be induced through feedback mechanisms in experiments. For example, in a first-price auction, when participants are informed of the winning bid, such information can lead to “loser’s regret,” causing them to increase their bids in future auctions to avoid possible regret. This phenomenon suggests that the information obtained affects the participants' bidding behavior, making them more cautious in making their choices.
Loser’s regret lets participants know what they will lose if they choose incorrectly, which motivates them to increase their bids to reduce the likelihood of future regret.
How to minimize regret
The Minimax Regret method was proposed by Leornard Savage in 1951. It aims to make decisions by minimizing the regret in the worst case scenario. Under this framework, decision makers not only seek the best option, but also consider the possible losses of missing the best option, which enables them to consider possible future outcomes more rationally when making decisions.
Application of regret in economics
Regret theory not only plays an important role in decision-making psychology, but is also widely used in economics, such as auction behavior, investment decision-making and other fields. Understanding how regret affects economic behavior has profound implications for companies in formulating marketing strategies, designing promotional activities, and predicting consumer behavior.
In many cases, the assessment of regret can also help individuals make more effective decisions that lead to better outcomes. Whether in investing, auctions, or everyday life, the possibility of regret always has a huge impact on our choices. As we try to choose a path, we should ask ourselves: How can we reduce our regrets in the future?
