Avoiding Future Regret in Purchase-Timing Decisions

Abstract

When deciding when to make a purchase, people often compare their outcomes to those that would have occurred had they purchased earlier or later. In this article, we examine how pre- and postpurchase comparisons affect regret and satisfaction, and whether consumers learn to avoid decisions that result in regret. In the first two experiments, we show that information learned after the purchase has a greater impact on satisfaction than information learned before the purchase. In addition, negative price comparisons have a greater impact on satisfaction than positive comparisons. These results imply that if consumers who receive postpurchase information wish to avoid future feelings of regret, they should defer their purchases longer. Our second two experiments demonstrate this phenomenon: Subjects who were exposed to postchoice information set higher decision thresholds, consistent with the minimization of future regret. Paradoxically, providing subjects with additional postchoice information resulted in decreased average earnings, suggesting that consumers may try to avoid future regret even when doing so conflicts with expected value maximization.

Keywords: Regret, Satisfaction, Risk, Decision Making

JEL Classification: D81, M31