Investor regret: The role of expectation in comparing what is to what might have been
Investors, like any decision maker, feel regret when they compare the outcome of an investment with what the outcome would have been had they invested differently. We argue and show that this counterfactual comparison process is most likely to take place when the decision maker's expectations a...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Cambridge University Press
2012-07-01
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| Series: | Judgment and Decision Making |
| Subjects: | |
| Online Access: | http://journal.sjdm.org/11/11303/jdm11303.pdf |
| _version_ | 1797766303279218688 |
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| author | Wen-Hsien Huang Marcel Zeelenberg |
| author_facet | Wen-Hsien Huang Marcel Zeelenberg |
| author_sort | Wen-Hsien Huang |
| collection | DOAJ |
| description | Investors, like any decision maker, feel regret when they compare the outcome of an investment with what the outcome would have been had they invested differently. We argue and show that this counterfactual comparison process is most likely to take place when the decision maker's expectations are violated. Across five scenario experiments we found that decision makers were influenced only by forgone investment outcomes when the realized investment fell short of the expected result. However, when their investments exceeded prior expectations, the effect of foregone investment on regret disappeared. In addition, Experiment 4 found that individual differences in the need to maximize further moderated the effects of their expectations, such that maximizers always take into account the forgone investment. The final experiment found that when probed to make counterfactual comparisons, also investments that exceed expectations may lead to regret. Together these experiments reveal insights into the comparative processes leading to decision regret. |
| first_indexed | 2024-03-12T20:22:19Z |
| format | Article |
| id | doaj.art-4ecb05d7e2d74eb4b3e64b6092d8ced5 |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T20:22:19Z |
| publishDate | 2012-07-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-4ecb05d7e2d74eb4b3e64b6092d8ced52023-08-02T00:47:48ZengCambridge University PressJudgment and Decision Making1930-29752012-07-0174441451Investor regret: The role of expectation in comparing what is to what might have beenWen-Hsien HuangMarcel ZeelenbergInvestors, like any decision maker, feel regret when they compare the outcome of an investment with what the outcome would have been had they invested differently. We argue and show that this counterfactual comparison process is most likely to take place when the decision maker's expectations are violated. Across five scenario experiments we found that decision makers were influenced only by forgone investment outcomes when the realized investment fell short of the expected result. However, when their investments exceeded prior expectations, the effect of foregone investment on regret disappeared. In addition, Experiment 4 found that individual differences in the need to maximize further moderated the effects of their expectations, such that maximizers always take into account the forgone investment. The final experiment found that when probed to make counterfactual comparisons, also investments that exceed expectations may lead to regret. Together these experiments reveal insights into the comparative processes leading to decision regret.http://journal.sjdm.org/11/11303/jdm11303.pdfregretexpectationdisappointmentcounterfactual thinkingmaximization.NAKeywords |
| spellingShingle | Wen-Hsien Huang Marcel Zeelenberg Investor regret: The role of expectation in comparing what is to what might have been Judgment and Decision Making regret expectation disappointment counterfactual thinking maximization.NAKeywords |
| title | Investor regret: The role of expectation in comparing what is to what might have been |
| title_full | Investor regret: The role of expectation in comparing what is to what might have been |
| title_fullStr | Investor regret: The role of expectation in comparing what is to what might have been |
| title_full_unstemmed | Investor regret: The role of expectation in comparing what is to what might have been |
| title_short | Investor regret: The role of expectation in comparing what is to what might have been |
| title_sort | investor regret the role of expectation in comparing what is to what might have been |
| topic | regret expectation disappointment counterfactual thinking maximization.NAKeywords |
| url | http://journal.sjdm.org/11/11303/jdm11303.pdf |
| work_keys_str_mv | AT wenhsienhuang investorregrettheroleofexpectationincomparingwhatistowhatmighthavebeen AT marcelzeelenberg investorregrettheroleofexpectationincomparingwhatistowhatmighthavebeen |