In the current paper we investigate how feedback over decision outcomes may affect future decisions. In an experimental study we demonstrate that if people receive feedback over the outcomes they obtained (“factual outcomes”) and the outcomes they would have obtained had they decided differently (“counterfactual outcomes”), they become regret-averse in subsequent decisions. This effect is not only observed when this feedback evoked regret (with counterfactual outcomes being higher than factual outcomes), but even when the feedback evoked no regret (with factual outcomes being equal to counterfactual outcomes). The findings suggest that this effect on subsequent decisions is at least partly due to the transfer of a comparison mind-set triggered in the prior choice.

We examine the behavioral consequences of experienced regret on subsequent choice. Previous ex- perimental research findings suggest that the impact of experienced regret on repeating subsequent choice is mediated by the anticipation of experiencing regret again. We argue that this impact is due to a mechanism linked to the subjective probability to regret in the subsequent choice. We conducted an experiment to test whether this hypothesis can be generalized to the case where the subsequent choice is different than the preced- ing one. Participants were presented with a sequence of two different decision tasks: a choice between two risky gambles followed by a matching task. To induce experienced regret, we provided two different types of feedback on the gambles: regret and non-regret feedback. To gain insights to the role of anticipated regret in mediating the effect of experienced regret, we also introduced two different types of feedback on the matching task: partial and complete feedback. We found that prior experienced regret and complete feedback on the subsequent choice should be both present for a change in behavior in the subsequent different choice. To interpret our results, we provide analytical considerations based on our hypothesis of changed subjective probability to regret, consistent with the observed behavior.

We present an experiment designed to test whether experienced regret and rejoicing evoked in a risk choice have an impact on subsequent intertemporal choice. We found that regret and rejoicing experienced prior to an intertemporal choice influenced considerably the way people relate to future: when regret was experienced participants preferred not to wait, whereas when rejoicing was experienced, participants were willing to wait longer. We show that in the framework of the discounted utility model experienced regret lowered and experienced rejoicing increased the discount factor.

This chapter compares and contrasts various approaches to understanding human decision- making under risk, and is trying to formulate requirements for a cognitive economics theory of risky decision-making. Then a first attempt is made to put forward such a theory by proposing a cognitive model JUDGEMAP based on the general cognitive architecture DUAL. This allows the model to be integrated with other cognitive processes such as perception, analogical reasoning, spreading activation memory retrieval, etc. The fact that all processes in DUAL are based on local computations and parallel processing allows for modeling the interplay between various cognitive processes during the decision-making process, in particular the model predicts that the unconscious and automatic process of spreading activation will influence the conscious process of argument building and comparison. This prediction is tested and confirmed by a psychological experiment that demonstrates that seemingly remote and irrelevant aspects of the environment can change the decision we make.

Theoretical and empirical body of research have exposed the powerful role of experiencing regret in guiding choice behavior. In this paper, we examined the impact of experienced regret and rejoicing induced by feedback provided on a risk decision prior to a two-period intertemporal choice. To our knowledge, this is the first attempt to bring together experienced regret and choice over time. We used the two-component discounted utility model approach as a framework. We applied previous research findings on the effect of experienced regret on utility, and we performed an experiment to test whether experienced regret and rejoicing have an impact on the discount factor. We found that both experienced regret and rejoicing have an impact on the way people discount future: when regret is experienced the discount factor decreases, whereas when rejoicing is experienced the discount factor increases.

This chapter compares and contrasts various approaches to understanding human decision making under risk, and is trying to formulate requirements for a cognitive economics theory of risky decision making. Then a first attempt is made to put forward such a theory by proposing a cognitive model JUDGEMAP based on the general cognitive architecture DUAL. This allows the model to be integrated with other cognitive processes such as perception, analogical reasoning, spreading activation memory retrieval, etc. The fact that all processes in DUAL are based on local computations and parallel processing allows for modelling the interplay between various cognitive processes during the decision-making process, in particular the model predicts that the unconscious and automatic process of spreading activation will influence the conscious process of argument building and comparison. This prediction is tested and confirmed by a psychological experiment that demonstrates that seemingly remote and irrelevant aspects of the environment can change the decision we make.