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Regret vs. Disappointment theory

Regret vs. Disappointment theory. Pavlo R. Blavatskyy. Disappointment theory. Initial idea: Bell (1985), Loomes and Sugden (1986) Established model: Gul (1991) Prospect based model “Disappointment is a psychological reaction to a choice outcome that does not meet one’s expectation”.

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Regret vs. Disappointment theory

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  1. Regret vs. Disappointment theory Pavlo R. Blavatskyy

  2. Disappointment theory • Initial idea: Bell (1985), Loomes and Sugden (1986) • Established model: Gul (1991) • Prospect based model • “Disappointment is a psychological reaction to a choice outcome that does not meet one’s expectation”

  3. Disappointment theory continued • Bell: one’s psychological expectation = EV • Individual is disappointed when an outcome worse than EV occurs

  4. Disappointment theory example • L1 9 with certainty • L2 (0, 0.9 ;100, 0.1) • Value of L2 is likely to be lower than value of L1 • … becauseL2 allows for possibility to receive 0 < EV (L2)

  5. Regret theory • Initial idea: Bell (1982, 83), Loomes and Sugden (1982) • Established model: Loomes and Sugden (1987) • Comparison between a chosen prospect and a foregone prospect • Special case of Fishburn (1988) BSS theory

  6. Regret theorycontinued • Regret is a psychological reaction to a choice of a prospect whose performance is worse than the performance of a foregone prospect

  7. Regret theoryformula • States of the world s1, … , sn

  8. Regret theory example • State s1 (s3) causes regret when L1 (L2) is chosen

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