Why do we anticipate regret before we make a decision?

Regret Aversion

, explained.
Bias

What is Regret Aversion?

Regret aversion, also known as regret theory, occurs when a decision is made in order to avoid regretting the alternative decision in the future. Regret can be a powerless and discomforting state, and people sometimes make decisions just to avoid these feelings.

A cartoon of a person with a big backpack standing between two signs - one says 'Take the trip, no regrets' and the other says 'Stay at home for a lifetime of regrets'

Where it occurs

Have you ever made a choice where you were explicitly aware of the influence of potential future regret on your decision-making? Perhaps a backpacking trip in Europe that you felt compelled to take because you thought that one day in the future you might regret not going. Or it could be that impulsive purchase during a limited-time offer where you told yourself, “I know if I don’t get it now, I’ll probably regret it later.” Regret aversion is our brain’s way of avoiding the emotional pain of regret associated with poor decision-making.

Regret aversion relies on two basic assumptions about humans and their decision-making process: first, that most individuals experience feelings of regret and joy, and second, that individuals contemplate these feelings when making decisions in uncertain situations.1 The belief that we will regret a decision in the future due to current choices is not solely rooted in logical reasoning; it is significantly shaped by emotional anticipation. This anticipation drives individuals to focus more on avoiding regret than on objectively evaluating the potential risks and benefits of their decisions.

While sometimes this fear of regret can just be a rationalization for a certain decision, it can also be a strong emotion that guides your preferences. And while such decisions driven by regret aversion can lead to ideal outcomes, they can also lead us astray. Going back to the earlier examples of the backpacking trip around Europe and the impromptu purchase, while the former may leave you with a lifetime of happy memories and stories to tell friends and family, the latter may take you over your monthly budget because you didn’t actually have the money to pay for it. 

Related Biases

Sources

  1. Wanghou, K., et al. (2021). Effect of Regret Aversion and Information Cascade on Investment Decisions in the Real Estate Sector: The Mediating Role of Risk Perception and the Moderating Effect of Financial Literacy. Frontiers in Psychology, 12, https://doi.org/10.3389/fpsyg.2021.736753.
  2. Seiler, M., Seiler, V., Traub, S., & Harrison, D. (2008). Regret aversion and false reference points in residential real estate. Journal of Real Estate Research, 30(4), 461-474.
  3. Abraham, C., & Sheeran, P. (2004). Deciding to exercise: The role of anticipated regret. British journal of health psychology, 9(2), 269-278.
  4. Wilson-Autzen, M. (2024, November 14). The savers who cashed in their pensions - and now regret it. The Telegraph. https://www.telegraph.co.uk/money/tax/panic-reeves-budget-take-lump-sum/
  5. Engelbrecht-Wiggans, R. (1989). The effect of regret on optimal bidding in auctions. Management Science, 35(6), 685-692.
  6. Coricelli, G., Critchley, H. D., Joffily, M., O'Doherty, J. P., Sirigu, A., & Dolan, R. J. (2005). Regret and its avoidance: a neuroimaging study of choice behavior. Nature neuroscience, 8(9), 1255-1262.
  7. Rempel-Clower, N. L. (2007). Role of orbitofrontal cortex connections in emotion. Annals of the New York Academy of Sciences, 1121(1), 72-86.
  8. Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263.
  9. Brewer, N. T., DeFrank, J. T., & Gilkey, M. B. (2016). Anticipated regret and health behavior: A meta-analysis. Health Psychology, 35(11), 1264.
  10. Michenaud, S., & Solnik, B. (2008). Applying regret theory to investment choices: Currency hedging decisions. Journal of International Money and Finance, 27(5), 677-694.
  11. Common Threads. (2018, March 9). Jeff Bezos: The Regret Minimization Framework. Prokit. https://theprokit.com/posts/a-jeff-bezos-classic-the-regret-minimization-framework/
  12. Gilbert, D. T., Morewedge, C. K., Risen, J. L., & Wilson, T. D. (2004). Looking forward to looking backward: The misprediction of regret. Psychological Science, 15(5), 346-350.
  13. Von Neumann, J., & Morgenstern, O. (1944). Theory of Games and Economic Behavior. Princeton University Press. 
  14. Loomes, G., & Sugden, R. (1982). Regret theory: An alternative theory of rational choice under uncertainty. The economic journal, 92(368), 805-824.
  15. Li, B., Hu, M., Chen, X., & Lei, Y. (2021). The Moderating Role of Anticipated Regret and Product Involvement on Online Impulsive Buying Behavior. Frontiers in Psychology, 12, https://doi.org/10.3389/fpsyg.2021.732459. 
  16. Keener, M. (n.d.). The psychology behind consumer regrets, or loss aversion. Quikly. https://hq.quikly.com/blog/psychology-consumer-regrets-loss-aversion
  17. Zeelenberg, M., & Pieters, R. (2004). Consequences of regret aversion in real life: The case of the Dutch postcode lottery. Organizational Behavior and Human Decision Processes, 93(2), 155-168.

About the Author

Dr. Lauren Braithwaite

Dr. Lauren Braithwaite

Dr. Lauren Braithwaite is a Social and Behaviour Change Design and Partnerships consultant working in the international development sector. Lauren has worked with education programmes in Afghanistan, Australia, Mexico, and Rwanda, and from 2017–2019 she was Artistic Director of the Afghan Women’s Orchestra. Lauren earned her PhD in Education and MSc in Musicology from the University of Oxford, and her BA in Music from the University of Cambridge. When she’s not putting pen to paper, Lauren enjoys running marathons and spending time with her two dogs.

About us

We are the leading applied research & innovation consultancy

Our insights are leveraged by the most ambitious organizations

Image

“

I was blown away with their application and translation of behavioral science into practice. They took a very complex ecosystem and created a series of interventions using an innovative mix of the latest research and creative client co-creation. I was so impressed at the final product they created, which was hugely comprehensive despite the large scope of the client being of the world's most far-reaching and best known consumer brands. I'm excited to see what we can create together in the future.

Heather McKee

BEHAVIORAL SCIENTIST

GLOBAL COFFEEHOUSE CHAIN PROJECT

OUR CLIENT SUCCESS

$0M

Annual Revenue Increase

By launching a behavioral science practice at the core of the organization, we helped one of the largest insurers in North America realize $30M increase in annual revenue.

0%

Increase in Monthly Users

By redesigning North America's first national digital platform for mental health, we achieved a 52% lift in monthly users and an 83% improvement on clinical assessment.

0%

Reduction In Design Time

By designing a new process and getting buy-in from the C-Suite team, we helped one of the largest smartphone manufacturers in the world reduce software design time by 75%.

0%

Reduction in Client Drop-Off

By implementing targeted nudges based on proactive interventions, we reduced drop-off rates for 450,000 clients belonging to USA's oldest debt consolidation organizations by 46%

Let's chat

Read Next

Regret Aversion

Why do we anticipate regret before we make a decision?

Why do we anticipate regret before we make a decision?

Learn More

Suggestibility

Why are we swayed by those around us?

Why are we swayed by those around us?

Learn More

Endowment Effect

Why do we value items more if they belong to us?

Why do we value items more if they belong to us?

Learn More
See All
Notes illustration

Eager to learn about how behavioral science can help your organization?

Contact us