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Regret theory: A new foundation

Enrico Diecidue and Jeeva Somasundaram

Journal of Economic Theory, 2017, vol. 172, issue C, 88-119

Abstract: We present a new behavioral foundation for regret theory. The central axiom of this foundation — trade-off consistency — renders regret theory observable at the individual level and makes our foundation consistent with a recently introduced empirical and quantitative measurement method. Our behavioral foundation allows deriving a continuous regret theory representation and separating utility from regret. The axioms in our behavioral foundation clarify that regret theory minimally deviates from expected utility by relaxing transitivity only.

Keywords: Regret theory; Trade-off consistency; Expected utility; Transitivity (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jetheo:v:172:y:2017:i:c:p:88-119