Searching to avoid regret: An experimental evidence

When faced with many options, individuals generally gather information prior to choosing. In this study, I identify the role of post-decision feedback on quality of missed alternatives, which can induce regret in decision-making, to explain the extent to which people would search. I isolate the effect of feedback on search levels cleanly by means of an abstract lab experiment set in a sequential search environment. The feedback levels vary across treatments. I find that individuals not only have higher reservation values that lead them to sample more options in the presence of this regret-inducing feedback, but their reservation values also decline less slowly over time in the presence of said feedback. Thus, the presence of feedback on forgone alternatives induces decision-makers to exhibit higher search intensities, indicating the important role played by regret aversion in search environments.