Regret And Rationality: If People Are Rational, They Should Not Experience Regret

How do economists and psychologists view regret? How do you explain it? Is there more than one kind of regret — which is responsible for the confusion in the literature? Regret is experienced by every single person and many of them would say that the root cause would be due to their recklessness during their decision making and the situation would have been different if they had done things rationally. In this essay, I will be discussing on the relationship between regret and rationality. The reason I am choosing this topic is because I would like to further research the connection between rational decisions and whether it would lead to any regrets. For example, if a human being were to make only rational decisions why is it that they would still regret some of the decisions made. Throughout this essay, I will be focusing on firstly, the connection between rational decisions and whether it may still lead to regret. Secondly, the different kinds of regret and how does economists and psychologist view regret differently.

Regret is viewed and tested very differently by economists and psychologists but there exists similar connection between rational decisions and regret. Economists view regret as a rational emotion and that with the presence of regret it would improve a person’s decision-making skills as it involves both cognitive and emotional components. Economist’s tests the impact of regret on a person’s decisions through observed choice behaviour which involves using a group of volunteers under a controlled environment to determine the choices they would make under certain circumstances and their experiences after. Through this testing, there are three main theories that have been discussed by economists. They are the regret theory and the expected utility theory.

The regret theory focuses on two assumptions. Firstly, people experience the sensations we call regret and rejoicing as such the second assumption is that when a person is making decisions under uncertainty, they try to anticipate the outcome and take into accounts these sensations. Bourgeois-Gironde discusses two distinct flaws regarding this theory in his paper, the first flaw explains that the sensations of regret and rejoice cannot be properly described in the concept of rationality and that a choice may be considered as rational but ultimately, an experience is just considered as an experience. The second flaw underlines the fact that if a person were to consistently take into consideration the sensations and anticipate it, it would be impossible to classify any decision made as irrational.

I do fully agree with the first flaw that the paper has stated but regarding the second flaw, even if a person properly takes into consideration what kind of feelings he would sense and anticipate them the decision is still liable to be considered as irrational. For e. g. in a casino, you place a large bet directly on the number 25 in Roulette and you also understand that the probability of it hitting the number is extremely low and that the most likely outcome is the loss of the bet. At the end, when the outcome is released, and it did not land on the number chosen, you feel the regret that you already anticipated beforehand but it does not remove the fact that it was an irrational decision by betting in the first place. Although, initially it might seem like a rational decision due to the prospect of money that could be earned leads to the term ‘decision regret’.

The second theory is the Expected Utility Theory, which is the theory that if a person were to deviate and make an irrational decision, an explanation of their choices and why they deviated will help them to re-adjust their behaviour and alter the irrational decision that they made. However, for this theory to work it would require a second or third-party to have observed the decision-making process and have the experience and judgement to determine if the choice was irrational and provide the relevant advice for them to understand what went wrong with their decision. This would heavily relate into the observer whether he is commenting on hindsight or foresight as it makes a world of difference.

Fischhoff discovered that by knowing the actual outcome of a decision would result in an increase in the perceived predictability as that option would now appear to be a lot more likely than it actually is. As such, I believe that this theory is flawed in multiple aspects and difficult to actualise in real life. Firstly, it would require another person to be present during the decision-making process and they must be able to understand the pros and cons of the whole situation. Secondly, the other person must possess considerable persuasion skills to be able to make the opposing party understand the err in their decisions. For e. g. A person is deciding whether he should go to Australia to study or stay in his home country. Even though he understands that going to Australia he is more likely to gain a much greater benefit, he decides to stay in his home country because he doesn’t feel like going to Australia. Only a person senior to him and someone he respects with knowledge of the world would be able to persuade him to change his irrational decision. This theory requires too many uncontrollable variables to pull off and although its not impossible it is extremely difficult. Psychologists view regret slightly differently than economists. It is regarded as a negative cognitive or emotional state that involves blaming ourselves due to a bad decision leading to a negative outcome however it can also be considered as a useful emotion that helps the person learn from making the same bad decision, they also do not care about the rationality of regret. Psychologists measure these via self-report instruments, for e. g. the use of surveys or questionnaires to gather a sizeable amount of data that relies on the persons self-evaluation of their own psyche before researching the patterns and outcome of the data to determine the results of their hypothesis.

There are two hypothesis that I will be focusing on. Firstly, the relationship between decision speed and choice regret with the disappointment that comes with making decisions under uncertainty. As people go through their daily lives, they could have to make hundreds of decisions a day ranging from small decisions whether to turn right or left, to much bigger decisions. It would be impossible to spend an equal amount of time on each decision and this results in many snap decisions with little think processes involved which sometimes lead to some bad decisions or choice regret.

Inbar states that one of the biggest determinants of regret would be the feeling of having rushed their decision or choice. Making the wrong decision and thinking back that if I had spent a bit more time thinking about it would have allowed me to avoid making this decision is much more common when there is a larger choice set and require more careful thinking. It only seems natural to take a longer time on more complex decisions, however there is also the opposite effect taking place when a person takes too much time on a seemingly simple decision which results in him over-thinking and making the wrong choice. Furthermore, the most preferred alternative may not be better than the other alternative.

The choice regret is further exemplified when making decisions under uncertainty. For e. g. a person is given a choice between, A: 100& chance of winning 1 million and 0% chance of winning nothing, and B: 75% chance of winning 11 million and 75% chance of winning nothing. Bell’s study shows that people would prefer the option B instead of A due to the higher amount of winning but if the person were to actually win nothing then the choice regret would have kicked in because he would have definitely won 1 million if he had chosen option A. Psychologists have recognized that one can regret one's choice process even when the choice does not turn out poorly. This is particularly true in the example given above, where even if the person chose option A and took the 1 million they would have regretted it because they had an extremely high chance of winning 11 million which was far greater than what they had gotten.

The second hypothesis focuses on the relative effects of abstract rumination leading to the issue of post-decisional regret. Rumination is defined as the action of repetitively going over a thought or problem without being able to reach a conclusion and is something found heavily is people diagnosed with depression. Abstract rumination involves repeatedly thinking about the higher order aspects of a situation, such as its causes, meanings and implications which in the cause of depressed patients usually are negative thoughts and focused on the negative emotions.

Deep regret often stems from the loss of someone close to you and usually results in the rumination of thinking what could have been done to save them and since there can be no possible good conclusion it results in the person falling deeper into depression. The purpose of this hypothesis is to highlight the significant impact regret has on a person, no matter how rational a person may be, they may not have decided to be thinking in such a way but events that occurred out of their control such as accidents would lead them to experience regret, as such it is not possible to state that as long as a person is rational they would not experience regret. Although how they decide to act afterwards would depend on themselves, but it is difficult to maintain rationale in the face of grief and personal emotions.

Overall, I believe that regret is unavoidable no matter how perfect your decision-making skills are, or how much u spend in making the correct decision because as said earlier the most preferred alternative may not be better than the other alternative and even if a person think rationally and make the decision that they decide is the most logical they might still regret their decision. As such instead of focusing on making the best possible choice in every scenario I believe that choosing the option that would bring you the most joy every time.

There are three different kinds of regret. Firstly, there is the regret known as reprimand or blame. This occurs when a situation arises, the person is presented with all the information and is fully aware of them. However, he does not act optimally despite having all the information provided and he ends up blaming himself for his decision. It may also occur even when he acted optimally but he did not spend the optimal effort to check the validity of the information.

Secondly, there is regret-of-decision which occurs when the person makes the optimum decision given the limited information and resources that he was given without the benefit of hindsight. The regret-of-decision occurs when the person makes the decision and discovers that outcome was not what he had expected, this leads him to think what if he had made a different decision or had better luck that something advantageous occurred. This is considered to be irrational when a person regrets the decision that he has made.

Lastly, there is regret-of-state. It occurs when the person makes the optimum decision with the limited info and resources that he has and does not have the benefit of hindsight, the outcome turns out to be either positive or not as expected. However, he learns a new fact or information that put something he had previously ignored in a positive light and has a much bigger influence now on his decisions. The person learns from his mistakes and assigns a greater importance to the fact so that it would not occur again but before he learns from it, the person may still feel sorrow due to the unfortunate outcome.

The three different types of regret give rise to some confusion in the literature, this is because the first is more of self-blame, the second one is when a person regrets the decision he makes and the last is focused on the emotional & mental state of the person when he makes the decision. For e. g. a person is deciding whether to invest in a someone else’s company or start his own lucrative business. The first type of regret would occur if he invested in someone else’s company and it is unsuccessful even though he could have set up his own business. The second type of regret occurs during the decision-making process and he regret choosing another person’s company instead of his own. The last type of regret occurs during the process of him investing in someone else’s company and he obtained some new information in which his own business would have been highly profitable as such he feels sorrow for wasting such an opportunity.

Overall, regret is considered by both economists and psychologists as an emotion that helps a person learns from his own mistakes and pushes them forward. It is difficult to fully explain the relationship between regret and rationality due to the many differing types of regret, which leads to certain confusion regarding the theories of regret but the main one would be regarding hindsight and the quality of the information presented to us during our decision making. As Bourgeois-Gironde said, regret does not only depend on the quality of the information relative to the past and future outcomes but also dependent on several other rational choices prior to it.