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The Role of Experienced Regret on Intertemporal Choice: An Experiment

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  • Daniela Raeva
  • Luigi Mittone
  • Jens Schwarzbach

Abstract

Theoretical and empirical body of research have exposed the powerful role of experiencing regret in guiding choice behavior. In this paper, we examined the impact of experienced regret and rejoicing induced by feedback provided on a risk decision prior to a two-period intertemporal choice. To our knowledge, this is the first attempt to bring together experienced regret and choice over time. We used the two-component discounted utility model approach as a framework. We applied previous research findings on the effect of experienced regret on utility, and we performed an experiment to test whether experienced regret and rejoicing have an impact on the discount factor. We found that both experienced regret and rejoicing have an impact on the way people discount future: when regret is experienced the discount factor decreases, whereas when rejoicing is experienced the discount factor increases.

Suggested Citation

  • Daniela Raeva & Luigi Mittone & Jens Schwarzbach, 2008. "The Role of Experienced Regret on Intertemporal Choice: An Experiment," CEEL Working Papers 0804, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpce:0804
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    Keywords

    intertemporal choice; regret theory;

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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