Searching to avoid regret: An experimental evidence

Tanushree Jhunjhunwala

Journal of Economic Behavior & Organization, 2021, vol. 189, issue C, 298-319

Abstract: When faced with many options, individuals generally gather information prior to choosing. In this study, I identify the role of post-decision feedback on quality of missed alternatives, which can induce regret in decision-making, to explain the extent to which people would search. I isolate the effect of feedback on search levels cleanly by means of an abstract lab experiment set in a sequential search environment. The feedback levels vary across treatments. I find that individuals not only have higher reservation values that lead them to sample more options in the presence of this regret-inducing feedback, but their reservation values also decline less slowly over time in the presence of said feedback. Thus, the presence of feedback on forgone alternatives induces decision-makers to exhibit higher search intensities, indicating the important role played by regret aversion in search environments.

Keywords: Regret; Information feedback; Sequential search (search for similar items in EconPapers)
JEL-codes: C91 D83 D91 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:189:y:2021:i:c:p:298-319

DOI: 10.1016/j.jebo.2021.06.036

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