A Generalized Utility Model of Disappointment and Regret Effects on Post-Choice Valuation

Abstract

In this paper we show that performance information about “forgone” alternatives (i.e., alternative that were considered but not chosen) can have a significant impact on post-choice valuation. Our approach introduces a new and parsimonious way of looking at satisfaction that combines the literature on post-choice valuation with research regarding generalized expected utility theory. While the post-valuation literature focuses on the selected brand as the valuation's basis (e.g., Anderson and Sullivan [Anderson, E. W., M. W. Sullivan. 1993. The antecedents and consequences of customer satisfaction for firms. (Spring) 125–143.], Bolton and Drew [Bolton, R., J. Drew. 1991. A multistage model of customers' assessments of service quality and value. 375–384.]), we draw on a stream of research in generalized expected utility theory that considers both chosen and forgone alternatives as the basis for valuation (e.g., Bell [Bell, D. 1983. Risk premiums for decision regret. 1156–1166 and Bell, D. 1985. Disappointment in decision making under uncertainty. 1–27.]; Loomes and Sugden [Loomes, G., R. Sugden. 1982. Regret theory: An alternative theory of rational choice under uncertainty. 805–824 and Loomes, G., R. Sugden. 1986. Disappointment and dynamic consistency in choice under uncertainty. 271–282.]). The result is a combined model of post-choice valuation that explicitly incorporates both concepts. Specifically, we extend the existing paradigm of post-choice valuation to include buyers' regret concerning forgone alternatives, proposing a generalized utility theory-based treatment of post-choice product assessment that uses the intuitively appealing concepts of disappointment and regret as the basis. We propose a model for conceptualizing post-choice valuation that is consistent with the existing literature, discuss how this model extends the construct to consider the influence of forgone alternatives, and report results of an empirical test that contrasts our model to important recent work in the area (e.g., Boulding et al. [Boulding, W., A. Kalra, R. Staelin, V. A. Zeithaml. 1993. A dynamic process model of service quality: From expectations to behavioral intentions. (February) 7–27.]). Our generalized model of post-choice valuation is based on the sum of three components that represent factors that may contribute to consumers' assessment of a chosen product or service. The first component is expected performance. The second component is disappointment, which captures the discrepancy between actual and expected performance (much as the disconfirmation construct in traditional satisfaction research). The third component is regret, which captures the difference between the performance of the chosen product/service and the performance of a forgone product/service. This perspective is useful in that risk is captured by the disappointment and regret terms, providing an intuitively appealing decomposition of post-choice valuation and offering several advances over previous representations of disappointment and regret. We test o...

The use of crying over spilled milk: A note on the rationality and functionality of regret

“…These emotions have an impact on how we evaluate decision outcomes (e.g. Inman et al, 1997). And ® nally, this impact of regret is taken into account before we decide, and thus may play an important role in determining what we choose (a detailed account of this in¯uence is provided later in this article).…”

Emotional Reactions to the Outcomes of Decisions: The Role of Counterfactual Thought in the Experience of Regret and Disappointment

“…These emotions are more utilitarian, that is, they are more related to the hedonic value of decision outcomes or events. This presumably is why disappointment and (in particular) regret have attracted so much attention in research on individual decision-making (see e.g., Beattie et al, 1994;Bell, 1982Bell, , 1985Gull, 1991;Kelsey, á Schepanski, I991;Inman, Dyer, 8c Regrer und disuppoimnrenr 3 Jia, 1997;Inman, á McAlister, 1994;Janis á Mann, 1977;Josephs, Larrick, Steele, á Nisbett, 1992;Larrick, 8r. Boles, 1995;Loomes 8c Sugden, 1982, 1986, 1987Mellers, Schwartz, Ho,~Ritov, 1997;Richard, van der Plig[, á de Vries, 1996;Ritov, 1996;Ritov, 8c Baron, 1995;Taylor, 1997;van Dijk, 8c van der Pligt, 1997;Zeelenberg et al, I996;Zeelenberg, 8c Beattie, 1997;Zeelenberg, van der Pligt, óc Manstead, nt press).…”

Consequences of Regret Aversion: Effects of Expected Feedback on Risky Decision Making

“…2 Research has shown that manipulations of feedback influence the levels of experienced regret or its positive counterpart (see, for example, Boles & Messick, 1995;Inman, Dyer & Jia, 1995;Ritov & Baron, 1995). Thus, feedback should also affect anticipated regret, and consequently decision making.…”