Dynamics of Networks and Regret and Their Implications for Competition Policy and Law and Related 'Wicked' Regulatory Challenges, Puzzles, and Paradoxes Now and in the Future

Abstract

Behavioral scholars are extending the dual-processing model of Kahneman and many other behavioral scholars in order to better understand how the emotions are shaping the preferences, judgment, behaviours, actions and decisions of market, regulatory, network and other actors. Behavioral research has recently transitioned from emotions in general to more granular analysis of specific emotions, especially those that generate more negative, aversive and “painful” feelings for decision makers. Among the specific emotions, regret in its various forms appears to be the most powerful when individuals and organizations are functioning in market, regulatory and network contexts.

Recent research has illustrated the many parallels, overlaps, and common themes between the literatures on behavioral economics, regret and other aversive emotions, regulatory compliance and performance, network theory, science, and economics, and wicked problems, as well as the social psychology literatures on power and the powerful, self-regulatory focus, and construal level theory. The purpose of this working paper is to attempt to bring these common themes together and explore: the dynamics of regret and networks; the under-analysed interactions between them; and the implications of these dynamics and interactions for “wicked” competition policy and law and related policy and regulatory challenges, puzzles and paradoxes, as the increasingly interconnected and networked global economy hopefully enters the post-COVID period.

Based on foresight analysis and experience to date in the current year, this will be one of the most complex, ambiguous, ambivalent, unpredictable, chaotic, turbulent, volatile, and tumultuous periods since the end of World War II. One of the major arguments of this paper is that, under these turbulent, tumultuous, and chaotic global conditions, the super emotion of regret will become even more prominent, intense, enduring, and influential for decision makers, particularly for market and regulatory actors functioning in digital and other networks. The major takeaway and unknown is whether and to what degree the positive attributes of the negative emotion of regret will interact with the positive attributes of small-world networks in a manner that will make an important contribution to finding and implementing remedies to the many wicked problems, puzzles, paradoxes, challenges and issues that competition and other authorities will be facing as we enter and go through the post-COVID period.

Keywords: reget, networks, competition policy and law, regulatory compliance and performance, behavioral economics

JEL Classification: D12, D22, K21, K23