Consequences of regret aversion in real life: The case of the Dutch postcode lottery

Although ample research has shown that decisions may cause regret and that the anticipation of regret may influence decision-making, this previous research was largely limited to hypothetical choices with student participants. The current research replicates and extends these findings for real life lottery participation decisions in non-student samples. Four studies are reported in which two lotteries in the Netherlands, the Postcode Lottery and the National State Lottery, were compared. The State Lottery is a traditional lottery in which one has to buy a ticket with a number printed on it. In the Postcode Lottery, one’s postcode is the ticket number, and hence even if not participating one may still find out that one would have won had one played. As our research shows, this particular feedback that is present in the Postcode Lottery but absent in the State Lottery influences the level of anticipated post-decisional regret, and moderates the influence that anticipated regret has on lottery participation. Study 1, 100 street interviews, confirmed our expectations that the Postcode Lottery may elicit regret. Study 2 found under controlled conditions, that people anticipate more regret over not playing when there is feedback about the neighbors winning a prize in the Postcode Lottery than in the State Lottery. However, when this feedback is absent they anticipate equal amounts of regret over not playing. Study 3 replicated these findings for regret, while showing that the two lotteries do not differ with respect to envy and jealousy, emotions that might also be invoked in this context. Study 4 validated that, as we predicted, anticipations of post-decisional regret influence decisions to play the Postcode lottery, but not the State Lottery. These findings demonstrate the external and discriminant validity of anticipated regret for decision-making, and indicate its pragmatic relevance. The implications or recent developments in regret research are discussed.     

The influence of social comparison on career decision-making: Vocational identity as a moderator and regret as a mediator

This study investigated the influence of social comparison on career choice certainty and its potential mechanisms: regret as a mediator and vocational identity as a moderator. Before the formal experiment, 30 pairs of vocational values representing typical conflicts in career decision-making for Chinese university students were obtained. The formal experiment adopted a single-factor (social comparison VS no comparison) between-subject design with vocational identity as an independent covariate. Ninety-eight junior and senior undergraduate students and graduate students in a university in China were invited to participate in the computer-controlled experiment, which involved vocational identity assessment, social comparison manipulation, and analogue career-choice scenario tests. Path analysis showed that: (a) Social comparison significantly and negatively predicted career choice certainty; (b) Regret partially mediated the effect of social comparison on career choice certainty; and (c) Vocational identity did not moderate the path between social comparison and regret, but significantly moderated the negative effect of regret on career choice certainty. These results indicated that in the collectivistic Chinese culture, individuals' career development trajectories may not be totally independent and are subject to influences by other people's choices, while emotion of regret and vocational identity development all play significant roles in this intricate process.     

Looking back with regret: Visual perspective in memory images differentially affects regret for actions and inactions

People can regret things they've done and things they've failed to do. However, the experience of a regrettable action tends to be painful, while regrettable inactions tend to be painful only when one considers the inaction's impact in the broader context of one's life as a whole (Gilovich & Medvec, 1995). Three experiments manipulated the visual perspective (own first-person vs. observer's third-person) that participants used to picture regretted actions or inactions from their lives. Imagery perspective influences the degree to which people's understanding of events is determined by features of the event itself (first-person) or by the integration of the event with broader self-knowledge (third-person) (Libby & Eibach, in press-b). As predicted, relative to first-person imagery, third-person imagery reduced regret for actions but increased regret for inactions. Results provide new insight into the relationship between imagery perspective, meaning-making, and emotion, and suggest ways to strategically increase or decrease regret.     

When experienced regret refuses to fade: Regrets of action and attempting to forget open life regrets

The emotional experience of regret often persists rather then fading over time. The present experiment with 101 student participants investigated whether recollecting life regrets of action, construing life regrets as psychologically open, or attempting to forget versus remember regret-related thoughts interfered with the fading of affect over a two-week interval. Results showed that regrets of action failed to show a fading affect pattern. In addition, disappointment failed to fade for regrets of inaction construed as open. Experienced regret failed to fade for regrets construed as open followed by attempts to forget regret-related thoughts. Intrusive and avoidant thoughts co-occurred with the latter disruptions in fading affect. Discussion concerns the causal relationship of memory and fading affect, and the different processes underlying fading of affect for discrete emotions.     

Learning to de-escalate: The effects of regret in escalation of commitment

The current research investigates whether and how individuals are able to learn from one escalation situation to another, hypothesizing that post-escalation regret will reduce subsequent escalation. In Experiment 1, individuals participated in an escalation task after escalating their commitments in a first escalation situation. In Experiment 2, participants’ regret was manipulated by asking them to imagine engaging in an escalation situation. The experiments expand our theoretical and practical understanding of how to prevent escalation of commitment by demonstrating that escalation-specific regret—either experienced from an earlier escalation or primed through imagining an escalation scenario—reduced subsequent escalation in a different context. The discussion focuses on the theoretical and practical impact of regret and emotions in general in escalation of commitment.     

When good evidence goes bad: the weak evidence effect in judgment and decision-making

An indispensable principle of rational thought is that positive evidence should increase belief. In this paper, we demonstrate that people routinely violate this principle when predicting an outcome from a weak cause. In Experiment 1 participants given weak positive evidence judged outcomes of public policy initiatives to be less likely than participants given no evidence, even though the evidence was separately judged to be supportive. Experiment 2 ruled out a pragmatic explanation of the result, that the weak evidence implies the absence of stronger evidence. In Experiment 3, weak positive evidence made people less likely to gamble on the outcome of the 2010 United States mid-term Congressional election. Experiments 4 and 5 replicated these findings with everyday causal scenarios. We argue that this “weak evidence effect” arises because people focus disproportionately on the mentioned weak cause and fail to think about alternative causes.     

Corporate foreign exchange risk management: A study in decision making under uncertainty

This paper examines the management of foreign exchange risk in multinational corporations in light of the conclusions of previous empirical and theoretical investigations into decision making under uncertainty. Cognitive perceptions of risk and uncertainty are shown to underlie the hedging decisions made by corporate treasury managers, which are often demonstrably sub-optimal in a Bayesian expected utility framework. The findings suggest that simple principal-agent approaches to explaining seemingly sub-optimal corporate risk management preferences are inadequate inasmuch as they fail to account for the markedly different perspectives on risk and uncertainty taken by financial economists (qua economists) and corporate financial risk managers.     

Friend or foe: the effect of implicit trustworthiness judgments in social decision-making

The human face appears to play a key role in signaling social intentions and usually people form reliable and strong impressions on the basis of someone's facial appearance. Therefore, facial signals could have a substantial influence on how people evaluate and behave towards another person in a social interaction, such as an interactive risky decision-making game. Indeed, there is a growing body of evidence that demonstrates that social behavior plays a crucial role in human decision-making. Although previous research has demonstrated that explicit social information about one's partner can influence decision-making behavior, such as knowledge about the partner's moral status, much less is known about how implicit facial social cues affect strategic decision-making. One particular social cue that may be especially important in assessing how to interact with a partner is facial trustworthiness, a rapid, implicit assessment of the likelihood that the partner will reciprocate a generous gesture. In this experiment, we tested the hypothesis that implicit processing of trustworthiness is related to the degree to which participants cooperate with previously unknown partners. Participants played a Trust Game with 79 hypothetical partners who were previously rated on subjective trustworthiness. In each game, participants made a decision about how much to trust their partner, as measured by how much money they invested with that partner, with no guarantee of return. As predicted, people invested more money in partners who were subjectively rated as more trustworthy, despite no objective relationship between these factors. Moreover, the relationship between the amount of money offered seemed to be stronger for trustworthy faces as compared to untrustworthy faces. Overall, these data indicate that the perceived trustworthiness is a strong and important social cue that influences decision-making.     

Myopic regret avoidance: Feedback avoidance and learning in repeated decision making

Decision makers can become trapped by myopic regret avoidance in which rejecting feedback to avoid short-term outcome regret (regret associated with counterfactual outcome comparisons) leads to reduced learning and greater long-term regret over continuing poor decisions. In a series of laboratory experiments involving repeated choices among uncertain monetary prospects, participants primed with outcome regret tended to decline feedback, learned the task slowly or not at all, and performed poorly. This pattern was reversed when decision makers were primed with self-blame regret (regret over an unjustified decision). Further, in a final experiment in which task learning was unnecessary, feedback was more often rejected in the self-blame regret condition than in the outcome regret condition. We discuss the findings in terms of a distinction between two regret components, one associated with outcome evaluation, the other with the justifiability of the decision process used in making the choice.     

Short- and long-term consequences in decision-making under risk: immediate feedback about long-term prospects benefits people tending to impulsive processing

Many decisions in everyday life involve weighing up immediate and expected future outcomes that may be conflictive. Yet, it is still unclear which cognitive functions may affect decision-making in such situations. We examined 150 healthy subjects using a new decision-making task that measures people’s ability at handling short- and long-term consequences under objective risk. Two task versions were developed to investigate the effects of feedback about long-term consequences on decision-making. One version includes feedback about changes in long-term prospects while the other does not. Both groups revealed that advantageous decision-making correlated with reasoning and working-memory abilities, however, no correlations with executive functions were found. The effect of feedback on decision-making performance was moderated by impulsivity and need for cognition. Our findings contribute to recent dual-system approaches for risky decision-making by showing that individuals with predispositions towards impulsive rather than reflective information processing could profit from feedback about long-term prospects.     

Effects of time-pressure on decision-making under uncertainty: changes in affective state and information processing strategy

An experiment is reported that investigated the extent to which affective state, information processing strategy and task structure determine the effects of time-pressure on decision-making. Research participants were presented with risk scenarios involving a choice between safe and risky actions. The scenarios were systematically varied in terms of outcome valence (positive or negative) and effort associated with taking the safe action (high or low). Half the participants were given unlimited time to make their decision, the other half were required to choose within a deadline. The findings showed that time-pressured participants were more anxious and energetic and used a number of different strategies to cope with the deadline. These effects, as well as changes in risk-taking, were shown to vary systematically with task structure, particularly the effort manipulation. The findings are discussed in terms of how they contribute to theories of time-pressure and the methodological implications they have for future research in this area.     

Decision-making competence in everyday life: The roles of general cognitive styles,decision-making styles and personality

Research indicates that decision-making competence in everyday life is associated with certain decision-making styles. The aims of this article are to extend this research by examining (a) the extent to which general cognitive styles explain variance in decision-making competence over and above decision-making styles, and (b) the extent to which personality explains variance in decision-making competence over and above both types of style variable. Participants (N = 355) completed measures of everyday decision-making competence (Decision Outcomes Inventory), decision styles (Decision Style Questionnaire; Maximization Inventory), cognitive styles (the Cognitive Styles Inventory; Rational-Experience Inventory), and the Big Five personality variables (IPIP Big-Five factor scales). The results indicate that cognitive styles offer no incremental validity over decision-making styles in predicting decision-making competence, but that personality does offer substantial incremental validity over general cognitive styles and decision-making styles. Jointly decision-making styles and personality account for a substantial amount of variance in everyday decision-making competence.     

Exploring the route choice decision-making process: A comparison of planned and observed routes obtained using person-based GPS

Trip decisions are complex and involve choosing the activity destination, mode and subsequently the route for travel. This paper presents detailed information on the planned and observed route choices for the home-to-work commute. Specifically, the study examines how people formulate their route plans and describe their attitudes and preferences for their selected routes. A geographic information system (GIS) records the planned route information with the route planning sequence. Observing route choice is a difficult procedure; however, through the use of the global positioning system (GPS), one can accurately record route choice. An automated activity–trip detection algorithm processes GPS data and displays results within an internet-based prompted recall diary. The diary is used to verify trip start and end times. This combination of GPS, GIS and diary responses provides great insight into the route choice decision-making process. Thirty-one individuals from Ontario, Canada participated in answering survey questions and the collection of person-based GPS data. Results indicate a preference to minimize travel time as stated by participants in deciding what route to travel. Participants also affirmed a desire to minimize the number of stop lights/signs, as well as, avoid congestion and maximize route directness. A comparison between planned and observed routes, reveals about one-fifth of participants deviated from their planned route. This study demonstrates the need for qualitative and quantitative survey methods for exploring planned and observed route choice.     

High school students’ career decision-making process: Consequences for choice implementation in higher education

This study investigated consequences of high school students’ career decision-making process for choice implementation in higher education. A sample of adolescents participated at the end of Grade 12 and was followed during the first and second year in higher education. Linear and logistic regression analyses revealed that students’ coping with career decisional tasks at the end of Grade 12 significantly contributed to the several aspects of early choice implementation (i.e., choice actualization, academic adjustment, commitment to the chosen study) during the first trimester in higher education. The importance of these aspects of early choice implementation is demonstrated through their relationship with academic achievement during the first year in higher education.     

Intergroup trust and reciprocity in strategic interactions: Effects of group decision-making mechanisms

I examined the impact of the consensus-making mechanism, where members reach a common decision via an intra-group discussion, on intergroup trust and reciprocity in a strategic setting. Data from a trust game generated the following results. First, compared to individual decision-makers, consensus groups exhibited (a) lower psychological trust, (b) higher behavioral trust, after controlling for psychological trust, and (c) lower reciprocity. Second, compared to decisions made by group-representatives, who are responsible for unilateral decisions on behalf of their groups, group consensus decisions were more trusting but less reciprocating. Thus, the specific decision-making mechanism adopted by groups in a strategic interaction may profoundly change the nature and the interplay of the interaction. Lastly, results show that the level of behavioral trust is driven by reciprocity expectations, while the level of reciprocity behavior, measured as a proportion of the trust received, does not change systematically with the level of trust experienced.     

Reaching for the unknown: Multiple target encoding and real-time decision-making in a rapid reach task

Decision-making is central to human cognition. Fundamental to every decision is the ability to internally represent the available choices and their relative costs and benefits. The most basic and frequent decisions we make occur as our motor system chooses and executes only those actions that achieve our current goals. Although these interactions with the environment may appear effortless, this belies what must be incredibly sophisticated visuomotor decision-making processes. In order to measure how visuomotor decisions unfold in real-time, we used a unique reaching paradigm that forced participants to initiate rapid hand movements toward multiple potential targets, with only one being cued after reach onset. We show across three experiments that, in cases of target uncertainty, trajectories are spatially sensitive to the probabilistic distribution of targets within the display. Specifically, when presented with two or three target displays, subjects initiate their reaches toward an intermediary or ‘averaged’ location before correcting their trajectory in-flight to the cued target location. A control experiment suggests that our effect depends on the targets acting as potential reach locations and not as distractors. This study is the first to show that the ‘averaging’ of target-directed reaching movements depends not only on the spatial position of the targets in the display but also the probability of acting at each target location.     

From Poisson shot noise to the integrated Ornstein-Uhlenbeck process: Neurally principled models of information accumulation in decision-making and response time

In the diffusion model of decision-making, evidence is accumulated by a Wiener diffusion process. A neurally motivated account of diffusive evidence accumulation is given, in which diffusive accumulation arises from an interaction between neural integration processes operating on short and long time scales. The short time scale process is modeled as a Poisson shot noise process with exponential decay. Stimulus information is coded by excitatory-inhibitory shot noise pairs. The long time scale process is modeled as algebraic integration, possibly implemented as a first-order autoregressive process realized by recurrent connections within a population of neurons. At high intensities, an excitatory-inhibitory shot noise pair converges weakly to an Ornstein-Uhlenbeck (OU) velocity process. The integrated OU process, or OU displacement process, obtained by integrating the velocity process over time, is indistinguishable at long times from the Wiener process. Diffusive information accumulation may therefore be characterized as an integrated OU process whose properties mimic those of the Wiener process.     

Probability matching in choice under uncertainty: Intuition versus deliberation

Gaissmaier and Schooler (2008) [Gaissmaier, W., & Schooler, L. J. (2008). The smart potential behind probability matching. Cognition, 109, 416-422] argue that probability matching, which has traditionally been viewed as a decision making error, may instead reflect an adaptive response to environments in which outcomes potentially follow predictable patterns. In choices involving monetary stakes, we find that probability matching persists even when it is not possible to identify or exploit outcome patterns and that many “probability matchers” rate an alternative strategy (maximizing) as superior when it is described to them. Probability matching appears to reflect a mistaken intuition that can be, but often is not, overridden by deliberate consideration of alternative choice strategies.