How do anticipation and experience of regret affect financial decision-making? A lab experiment

Authors

  • Jean-Francois GAJEWSKI
  • SIMA OHADI

Keywords:

Financial decision-making, regret, risk, skewness, experiment.

Abstract

Regret is a negative emotion experienced when people realize that a different choice would have led to a better payoff. People can anticipate regret before decisions, which prompts them to make a regret-minimizing decision. Regret affects people’s risk tendencies for financial decisions, though it is less understood how anticipated regret and the experience of regret might affect people’s risk and skewness choices. A lab experiment offers insights into the effect of regret on people’s risk and skewness decisions, with and without feedback. Regret aversion is important for explaining people’s choices when the attributes of lotteries are not too distinct. Moreover, people with greater regret aversion are more likely to choose a positively skewed lottery.

Author Biographies

Jean-Francois GAJEWSKI

Lyon 3 Jean Moulin
University, iaelyon,
Magellan,

SIMA OHADI

Savoie Mont Blanc
University, IREGE,

Published

2021-04-22

How to Cite

GAJEWSKI, J.-F., & OHADI, S. (2021). How do anticipation and experience of regret affect financial decision-making? A lab experiment. Bankers, Markets & Investors, 164, 4-23. Retrieved from https://journaleska.com/index.php/bmi/article/view/4761