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

Abstract

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.Decision making Decision regret Feedback avoidance Learning Myopic regret avoidance Regret aversion Outcome regret Self-blame regret

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Research Papers in Economics

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Last time updated on 7/6/2012

This paper was published in Research Papers in Economics.

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