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DR@W Forum - Stephen Lovelady (Department of Economics, University of 糖心TV)
Stephen Lovelady (Department of Economics, University of 糖心TV)
A Simple Experiment on the Effects of Experienced Regret and Context
(joint work with Daniel Sgroi)
Recent research has indicated a significant role for both the anticipation and experience of regret on decision making under uncertainty and risk. Experimental studies have shown that this effect is “context dependent”, in that it depends on such things as whether or not an option can be considered the “status quo”, whether or not there is an option which will be chosen by “inaction” and the degree of “responsibility” an individual feels for the outcome of their actions.
In this experiment, we construct the simplest possible environment in which to examine regret, of a two option gambling scenario, where dice rolls decide the payoffs for each gamble. We then examine the subsequent behaviour of participants who lost their first gamble, and “regret” not choosing the other option, by asking them to choose between another two gambles. We manipulate the context of the second stage gambles, simply through “labelling” one option either to be similar to the one which caused regret in stage one (treatment group), or different by changing the names and how many dice are used to resolve the gambles (control group), holding constant the payoffs and probabilities. We show that this slight change in context is sufficient to generate significant differences in behaviour, between the control and treatment groups, but only in cases where there was an experience of regret at the first stage.
Hence, the effect of experienced regret on subsequent behaviour is dependent on very arbitrary aspects of the choice which caused the regret, such as the label of the option which was chosen. It is possible to “remind” the decision maker of the experience of regret, by simply re-using the same label at another decision point, and induce a change in behaviour. However, we find the direction of this change in behaviour is opposite to what is predicted by most intuition about the effects of regret.