When they examine the actual content of counterfactual thinking, researchers find that individuals tend to focus on aspects of a situation that are under their control. When asked to imagine an automobile accident that involves someone who is speeding while driving on a rainy day with poor visibility, respondents are much more likely to “undo” the accident by having the driver be more cautious than by having the day be clear and dry. This focus on individual control conforms with my earlier point that regret and responsibility go hand in hand. Of course, most of the situations we encounter have a mixture of aspects we could have controlled and aspects we couldn’t have. When a student who didn’t study much does badly on an exam, he could and should take responsibility for not having studied more. But the exam could have been easier, or it could have been more focused on material that the student knew well. The fact that counterfactual thinking seems to hone in on the controllable aspects of a situation only increases the chances that a person will experience regret when engaging in counterfactual thinking.
There is also an important distinction to be made between “upward” and “downward” counterfactuals. Upward counterfactuals are imagined states that are better than what actually happened, and downward counterfactuals are imagined states that are worse. The Olympic silver medalist who imagines tripping, falling, and not finishing the race at all is engaging in downward counterfactual thinking, and doing so should enhance her feelings about winning the silver. It’s only the upward counterfactual—imagining winning the gold—that will diminish her sense of achievement. So generating downward counterfactuals might engender not only a sense of satisfaction, but a sense of gratitude that things didn’t turn out worse. What studies have shown, however, is that people rarely produce downward counterfactuals unless asked specifically to do so.
There is an important lesson to be taken from this research on counterfactual thinking, and it’s not that we should stop doing it; counterfactual thinking is a powerful intellectual tool. The lesson is that we should try to do more downward counterfactual thinking. While upward counterfactual thinking may inspire us to do better the next time, downward counterfactual thinking may induce us to be grateful for how well we did this time. The right balance of upward and downward counterfactual thinking may enable us to avoid spiraling into a state of misery while at the same time inspiring us to improve our performance.
Regret and Satisfaction
AS WE HAVE SEEN, REGRET WILL MAKE US FEEL WORSE AFTER DECISIONS—EVEN ones that work out—than we otherwise would, especially when we take opportunity costs into consideration.
Opportunity costs capture the benefits that would have come as a result of a different choice, and as soon as you return from that seaside vacation, the counterfactual thinking may begin. “That was a great vacation. If only they had better restaurants there, it would have been perfect. If only there had been some interesting shops. What I wouldn’t have given for one really good movie theater.” And so on. With each of these counterfactual thoughts, another little smidgen of regret insinuates itself into the evaluation of a decision. And as we saw in the last chapter, if the number of candidates from which the choice is made goes up, each having some attractive feature that the chosen candidate does not, the opportunity costs (and the counterfactual thoughts and the smidgens of regret) mount higher and higher.
Counterfactual thoughts tend to be triggered by negative events, and events can be negative in absolute terms. If the beach is dirty, it rains constantly, and the accommodations are dingy, then the seaside vacation is just bad. But an event also can be negative in relative terms—relative either to aspirations or expectations. So if, by engaging in the careful decision-making process and trade-off assessment I discussed in the last chapter, you bring to mind all the wonderful things a seaside vacation might have included but didn’t, there will be no shortage of negatives to occupy your mind, even if the vacation was good.
Exactly the same thing applies prior to a decision. By thinking about what you will give up by going to the seaside, by imagining opportunity costs in advance, it seems inevitable that the anticipated regret induced by these thoughts will make the most attractive option seem less attractive. Sure, you may still decide to go to the beach, but not with quite the same enthusiasm.
Another way of making this point is in terms of contrast effects. If a person comes right out of a sauna and jumps into a swimming pool, the water in the pool feels really cold, because of the contrast between the water temperature and the temperature in the sauna. Jumping into the same pool after having just come indoors on a sub-zero winter day will produce sensations of warmth. And what counterfactual thinking does is establish a contrast between a person’s actual experience and an imagined alternative. Any actual seaside vacation suffers by contrast with an imagined, perfect alternative, and with that counterfactual contrast comes regret, more acutely for people who are maximizers than for people who are satisficers. It is the maximizers who will have these counterfactual perfect options in mind, which will make any real-world option pale by comparison.
What Regret Makes Us Do
UNLIKE OTHER NEGATIVE EMOTIONS—ANGER, SADNESS, DISAPPOINTMENT, even grief—what is so difficult about regret is the feeling that the regrettable state of affairs could have been avoided and that it could have been avoided by you, if only you had chosen differently.
In the last chapter we saw that individuals facing decisions involving trade-offs, and thus opportunities for regret, will avoid making those decisions altogether. Or if they can’t avoid the decisions completely, they will construe them so that they no longer seem to involve trade-offs. “When it comes to buying a car, nothing’s more important than the safety of my family.” “When it comes to taking vacations, nothing compares to the smell of the ocean and the sound of the surf.” “The only thing I care about in a house is that I have enough space to spread out.” And so on.
Not surprisingly, when confronted with decisions, we often choose the option that minimizes the chances that we will experience regret.
Regret Aversion
AS WE SAW IN CHAPTER 3, MOST PEOPLE TEND TO BE RISK AVERSE when they are contemplating a choice between a certain small gain and an uncertain large one. So, for example, if given the option between a sure $100 and a fifty-fifty chance to gain $200, most of us will take the sure thing, because, subjectively, $200 is not twice as good as $100, and thus not worth the fifty-fifty risk. But another reason for risk aversion is regret aversion. Suppose you have the choice between a guaranteed $100 and a risky $200, and suppose you choose the $100. You’ll never know what would have happened if instead you had chosen to go for the risky $200. So you’ll have no reason to regret your decision to take the sure thing. In contrast, suppose you go for the risk. Now you can’t help but know what would have happened if you had taken the sure thing; that’s what makes it a sure thing. So if you opt for risk and you lose, not only do you wind up with nothing, but you also have to live with the sting that you could have had $100. Taking the sure thing is a way to guarantee that you won’t regret your decision—you won’t regret it because you’ll never know how the alternative would have turned out.
If this thinking is correct, then it should make a difference to tell someone that if they choose the guaranteed $100, you will still flip the coin and let them know whether they would have won or lost on the riskier proposition. Under these conditions, people can no longer avoid the possibility of regret no matter which option they choose. And, indeed, it does make a difference. We show greater willingness to take risks when we know we will find out how the unchosen alternative turned out and there is thus no way to protect ourselves from regret.
Studies like this show that not only is regret an important consequence of many decisions, but that the prospect of regret is an important cause of many decisions. People will make choices with the anticipation of regret firmly in mind. If you’re trying to decide whether to buy a Toyota Camry or a Honda Accord and your closest friend just b
ought an Accord, you’re likely to buy one too, partly because the only way to avoid the information that you made a mistake is to buy what your friend bought and thus avoid potentially painful comparisons. Of course, you can’t really avoid that information completely. Lots of people buy Camrys and Accords, there are articles in newspapers and magazines about them, and so on. But this kind of information pales in comparison to the vivid, detailed, day-after-day confirmation that your friend bought a better car than you did.
Another effect that the desire to avoid regret can have is to induce people not to act at all, what is called inaction inertia. Imagine being in the market for a sofa and seeing one you like on sale for 30 percent below list price. It’s fairly early in your search, and you think that you may be able to do better, so you pass up the sale. Several weeks of shopping fail to turn up anything better, so you go back to buy the one you saw earlier. The trouble is that now it’s selling for 10 percent off list price. Do you buy it? For many shoppers, the answer is no. If they buy it, there will be no way to avoid regretting not having bought it earlier. If they don’t buy it, they still keep the possibility alive that they’ll find something better.
Examples of inaction inertia abound. Having failed to sign up for a frequent-flyer program and then made a 5,000-mile round-trip flight, we are reluctant to sign up when given the opportunity again. If we do sign up, we can no longer tell ourselves that we don’t fly enough and it isn’t worth the trouble; instead, we can only regret not having signed up earlier. Having declined to join a fitness club located five minutes from our home, then changed our minds only to discover that the club’s membership rolls are closed, we refuse to join one located twenty minutes from our house. Again, by not joining, we can tell ourselves that we get enough exercise anyway or that we don’t have the time to make proper use of the club. Once we join the distant club, all the reasons for not joining go out the window and we are left regretting our initial failure to act.
Regret and “Sunk Costs”
REMEMBER THOSE EXPENSIVE SHOES THAT KILL YOUR FEET THAT WE left sitting in the back of your closet in Chapter 3? I mentioned them as an example of what are called sunk costs. Having bought the shoes, you keep them in the closet even though you know you’re never going to put them on again, because to give the shoes away or throw them away would force you to acknowledge a loss. Similarly, people hold on to stocks that have decreased in value because selling them would turn the investment into a loss. What should matter in decisions about holding or selling stocks is only your assessment of future performance and not (tax considerations aside) the price at which the stocks were purchased.
In a classic demonstration of the power of sunk costs, people were offered season subscriptions to a local theater company. Some were offered the tickets at full price and others at a discount. Then the researchers simply kept track of how often the ticket purchasers actually attended the plays over the course of the season. What they found was that full-price payers were more likely to show up at performances than discount payers. The reason for this, the researchers argued, was that the full-price payers would feel worse about wasting money if they didn’t use the tickets than would the discount payers. Because it would constitute a bigger loss for the full-price payers, failure to attend a performance would produce more regret.
From the perspective of a model of decision making that is future oriented, being sensitive to sunk costs is a mistake. The tickets are bought, and the money is spent. That’s over. The only question the ticket holders should be asking themselves on the night of the performance is, “Will I get more satisfaction out of a night at the theater or out of a night spent reading and listening to music at home?” But people don’t operate this way.
Sunk-cost effects have been demonstrated in a variety of different settings. In one study, respondents were asked to imagine having purchased nonrefundable tickets for two ski trips to different places, only to discover that the trips are on the same day. One ticket cost $50 and the other cost $25, but there is good reason to think that they’ll have a better time on the $25 trip. Which one do people choose to go on? For the most part, they choose the $50 trip. According to the same logic of sunk costs, professional basketball coaches give more playing time to players earning higher salaries, independent of their current level of performance. And people who have started their own businesses are more likely to invest in expanding them than people who have purchased their businesses from others. Again, in both of these cases, what “should” matter are the prospects for future performance—of the business or of the player. But what also seems to matter is the level of previous investment.
What leads me to believe that sunk-cost effects are motivated by the desire to avoid regret rather than just the desire to avoid a loss is that sunk-cost effects are much bigger when a person bears responsibility for the initial decision (to buy the ski tickets or the expensive shoes). If sunk-cost effects are just about hating to lose, then whether the loss is your responsibility or not is irrelevant; it’s the same loss.
I, personally, succumb to sunk-cost effects in a variety of settings that I’m aware of, and probably many others that I’m not. I have clothes in my closet and CDs on my rack that I know I’m not going to wear or listen to again. Yet I can’t get rid of them. When I eat in a restaurant, I feel compelled to finish what’s on my plate, no matter how full I am. When I’m two hundred pages into reading a book, I force myself to finish it, no matter how little I’m enjoying it or learning from it. The list goes on and on.
Many people persist in very troubled relationships not because of love or what they owe the other person or because they feel a moral obligation to honor vows, but because of all the time and effort they’ve already put in. How many people stick out an arduous course of training, like, say, medical school, even after they discover that they really don’t want to be doctors? And arguably, why did the United States persist as long as it did in Vietnam, even when it was plain to virtually everyone involved that no good outcome could result from continued involvement? “If we get out now,” people said, “then all the thousands of soldiers and civilians who have died will have died in vain.” This is thinking in terms of the past, not the future. Those who had died were dead and could not be brought back. The questions that should have been asked (all moral and political considerations about the appropriateness of the war aside) concerned the prospects of soldiers and civilians who were still alive.
Regret, Maximizing, and Choice Possibilities
REGRET OBVIOUSLY PLAYS A VERY BIG ROLE IN ALL OUR DECISIONS, but how does choice, particularly an overabundance of choice, affect regret?
We have seen that two of the factors affecting regret are
Personal responsibility for the result
How easily an individual can imagine a counterfactual, better alternative
The availability of choice obviously exacerbates both of these factors. When there are no options, what can you do? Disappointment, maybe; regret, no. When you have only a few options, you do the best you can, but the world may simply not allow you to do as well as you would like. When there are many options, the chances increase that there is a really good one out there, and you feel that you ought to be able to find it. When the option you actually settle on proves disappointing, you regret not having chosen more wisely. And as the number of options continues to proliferate, making an exhaustive investigation of the possibilities impossible, concern that there may be a better option out there may induce you to anticipate the regret you will feel later on, when that option is discovered, and thus prevent you from making a decision at all.
When considering a decision involving complex possibilities, the fact that there is no one option that is best in all respects will induce people to consider the opportunity costs associated with choosing the best option. And the more options there are, the more likely it is that there will be some that are better in certain respects than the chosen one. So opportunity costs will mount as the number of opti
ons increases, and as opportunity costs mount, so will regret.
There will be anticipatory regret that the overall best car doesn’t have the best sound system (“Will I be kicking myself for not having better sound if I buy this car?”), and there will be postdecision regret that the overall best car doesn’t have the best sound system (“Why couldn’t they have made the stereo better?”). The more options there are, the more if only’s you will be able to generate. And with each if only you generate will come a little more regret and a little less satisfaction with the choice you actually made. Though it may be annoying to go into a bank and discover that only a single teller’s window is open and the line is long, there won’t be anything to regret. But what if there are two long lines and you choose the wrong one? Janet Landman, in her excellent book Regret, sums it up this way: “Regret may threaten decisions with multiple attractive alternatives more than decisions offering only one or a more limited set of alternatives…. Ironically, then, the greater the number of appealing choices, the greater the opportunity for regret.”
It should also be clear that the problem of regret will loom larger for maximizers than for satisficers. No matter how good something is, if a maximizer discovers something better, he’ll regret having failed to choose it in the first place. Perfection is the only weapon against regret, and endless, exhaustive, paralyzing consideration of the alternatives is the only way to achieve perfection. For a satisficer, the stakes are lower. The possibility of regret doesn’t loom as large, and perfection is unnecessary.
Is There an Upside to Regret?
WE ALL KNOW THAT REGRET CAN MAKE PEOPLE MISERABLE, BUT regret also serves several important functions. First, anticipating that we may regret a decision may induce us to take the decision seriously and to imagine the various scenarios that may follow it. This anticipation may help us to see consequences of a decision that would not have been evident otherwise. Second, regret may emphasize the mistakes we made in arriving at a decision, so that, should a similar situation arise in the future, we won’t make the same mistakes. Third, regret may mobilize or motivate us to take the actions necessary to undo a decision or ameliorate some of its unfortunate consequences. Fourth, regret is a signal to others that we care about what happened, are sorry that it happened, and will do what we can to make sure that it doesn’t happen again. Because so many of the decisions we make have consequences for others, a sign to those others that we feel their pain may induce them to stick with us and trust us in the future.
The Paradox of Choice Page 14