Non Je Ne Regrette Rien...

Regret is just one of many possible motivations behind individual decision making and thus is really interesting to behavioural economists.

For example, consider the following game where the strategies are called Blue and Yellow:

Your payoffs (£):		Other Person
		Blue	Yellow
You	Blue	8	0
	Yellow	4	2

So if you play Blue and the other plays Blue then you get £8. But if they play Yellow when you play Blue you get £0.

You and the other person make the decisions simultaneously, and you do not know the other persons payoff or with what likelihood they will choose Blue or Yellow.

Clearly then, Blue is the riskier startegy for you. Yellow is the safer option.

If we ignore regret...

If you chose Yellow and earned £2 - you might be disappointed that you could have £2 more if they had chosen Blue. But if you got a payoff of £4 you should very pleased as it was the best outcome from your strategy.

However, with regret...

If you get £2 after choosing Yellow then you will have no regret (as you got more than if you had followed another strategy). But if you get £4 then you, despite getting the higher payoff, will regret your choice (as you could have got £4 more from choosing Blue).

To find out whether people are motivated by regret we can repeat the game many times, and see how people change their choice. If lots of people choose Yellow and recieve £4, only to switch to Blue the next time they play, then we could conclude that regret is important.

Thus we can use an experiment to discover whether people are primarily motivated by regret.

I first heard of this game in a presentation today, and I look forward to discovering what data has been collected on the matter...