Regret is a powerful emotion that accompanies the feeling of having made the wrong decision. It haunts us, making us wish for a second chance to alter our choices. Surprisingly, the fear of regret can lead to irrational behavior and impact decision-making processes. In this article, we will explore the influence of regret, its association with action and inaction, and how it affects our choices in various scenarios.

Regret and Action vs. Inaction

Consider two individuals, Paul and George, who made opposite decisions with similar outcomes in the stock market. Paul held shares in company A but considered switching to company B and ultimately decided against it, only to discover he would have gained $1,200 if he had made the switch. On the other hand, George held shares in company B but chose to sell them and invest in company A, only to find out he would have made an extra $1,200 by sticking with B. While objectively, both individuals experienced the same loss, the majority of people tend to believe that Paul would feel more regret than George. This is because Paul’s inaction, or passivity, aligns with the norm, while George’s action represents the exception. The fear of deviating from the crowd can intensify the feeling of regret.

The Exception of Inaction

Sometimes, it is not the one who acts but the one who refrains from acting that experiences the most regret. Take, for example, a traditional publishing house that adamantly refuses to publish e-books, citing their commitment to the tradition of paper books. Soon after, ten publishers who embraced e-books go bankrupt, including one that stuck to paper-only publishing. In this scenario, the traditional publisher’s decision not to act becomes the exception. Surprisingly, they may feel more regret than their e-book-publishing counterparts, garnering sympathy for their stoicism in the face of change.

The Sympathy for the Exception

Psychologist Daniel Kahneman highlights the sympathy we feel for those who deviate from the norm in his book, “Thinking, Fast and Slow.” After every plane crash, we often hear the story of an individual who narrowly escaped tragedy by changing their flight booking at the last minute. Despite being an exception to the norm, this individual elicits more sympathy than the “normal” passengers who were booked on the ill-fated flight from the beginning. The fear of regret heightens our emotional response and shapes our perception of these exceptional cases.

The Irrationality of the Fear of Regret

The fear of regret can lead to irrational behavior, pushing us to act conservatively and avoid deviating too much from the crowd. Even self-confident traders succumb to this fear, as evidenced by their tendency to conform to the masses by offloading exotic stocks before performance reviews and bonus calculations. Additionally, the fear of regret, combined with the endowment effect, prevents us from discarding things we no longer need, driven by the fear of remorse for potentially requiring them in the future.

The Last Chance Offer

The fear of regret becomes particularly troublesome when coupled with “last chance” offers. These offers, often accompanied by urgency or scarcity, exploit our fear of missing out. For example, a safari brochure advertising the “last chance to see a rhino before the species is extinct” can trigger irrational behavior. Despite having no previous interest in seeing a rhino, the fear of regret convinces us to embark on an expensive journey to fulfill this supposedly once-in-a-lifetime opportunity. In reality, such opportunities may not be as unique or scarce as they appear.

Conclusion

The fear of regret can have a profound impact on decision-making processes. It influences our perception of action and inaction, making us prone to regrets for both deviations from the norm and missed opportunities. Recognizing the power of this emotion is essential in making more informed choices and avoiding irrational behavior driven by the fear of regret. By understanding its influence, we can navigate decision-making processes more effectively and cultivate a mindset that embraces thoughtful evaluation rather than succumbing to the allure of regret avoidance.