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
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Englisch
- Erschienen in
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Series: Discussion Papers of the Max Planck Institute for Research on Collective Goods ; No. 2019/10
- Klassifikation
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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
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regret aversion
coordination games
information
- Ereignis
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Geistige Schöpfung
- (wer)
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Cerrone, Claudia
Feri, Francesco
Neary, Philip R.
- Ereignis
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Veröffentlichung
- (wer)
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Max Planck Institute for Research on Collective Goods
- (wo)
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Bonn
- (wann)
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2019
- Handle
- Letzte Aktualisierung
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20.09.2024, 08:23 MESZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Cerrone, Claudia
- Feri, Francesco
- Neary, Philip R.
- Max Planck Institute for Research on Collective Goods
Entstanden
- 2019