Arbeitspapier

Ignorance is bliss: A game of regret

Existing models of regret aversion assume that individuals can make an ex-post comparison between their choice and a foregone alternative. Yet in many situations such a comparison can be made only if someone else chose the alternative option. We develop a model where regret-averse agents must decide between the status quo and a new risky option that outperforms the status quo in expectation, and learn the outcome of the risky option, if unchosen, with a probability that depends on the choices of others. This turns what was previously a series of single-person decision problems into a coordination game. Most notably, regret can facilitate coordination on the status quo - an action that would not be observed if the agents were acting in isolation or had standard preferences. We experimentally test the model and find that regret-averse agents behave as predicted by our theory.

Sprache
Englisch

Erschienen in
Series: Discussion Papers of the Max Planck Institute for Research on Collective Goods ; No. 2019/10

Klassifikation
Wirtschaft
Noncooperative Games
Design of Experiments: Laboratory, Group Behavior
Criteria for Decision-Making under Risk and Uncertainty
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Thema
regret aversion
coordination games
information

Ereignis
Geistige Schöpfung
(wer)
Cerrone, Claudia
Feri, Francesco
Neary, Philip R.
Ereignis
Veröffentlichung
(wer)
Max Planck Institute for Research on Collective Goods
(wo)
Bonn
(wann)
2019

Handle
Letzte Aktualisierung
20.09.2024, 08:23 MESZ

Datenpartner

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Cerrone, Claudia
  • Feri, Francesco
  • Neary, Philip R.
  • Max Planck Institute for Research on Collective Goods

Entstanden

  • 2019

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