Too Proud to Stop: Regret in Dynamic Decisions

A-Tier
Journal: Journal of the European Economic Association
Year: 2021
Volume: 19
Issue: 1
Pages: 165-199

Authors (2)

Philipp Strack (Yale University) Paul Viefers (not in RePEc)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Regret and its anticipation affect a wide range of decisions. Job-seekers reject offers while waiting for an offer to match their best past offer; investors hold on to badly performing stocks; and managers throw good money after bad projects. We analyze behavior of a decision maker with regret preferences in a dynamic context and show that regret agents have a disposition to gamble until they receive a payoff matching the best past offer. Results from a lab experiment confirm that many subjects exhibit such behavior and are reluctant to stop below the past peak.

Technical Details

RePEc Handle
repec:oup:jeurec:v:19:y:2021:i:1:p:165-199.
Journal Field
General
Author Count
2
Added to Database
2026-01-29