The Power of Regret

Geoffrey Engelstein in Nautilus:

One of the primary motivators of human behavior is avoiding regret. Before the legendary behavioral economists Daniel Kahneman and Amos Tversky formalized prospect theory and loss aversion, they believed that regret avoidance was at the root of the human behaviors they were studying. However, they learned that there are behaviors that regret avoidance could not explain and were led to a broader picture.

Let’s take a look at a simple game that sheds a bit more light on the psychology of regret.

I have two dice—one red, one white—and two identical cups. I secretly place one die under each cup (no trickery), mix them up, and ask you to select the cup with the red die. You did not see me put the dice under the cups, so you have absolutely no information on which to base your decision. If you make the right choice, I give you $5. If not, you gain nothing.

Go ahead and select one of the cups. Let’s say you pick the cup on the right. I slide it toward you but don’t let you look underneath.

I then ask you if you want to switch to the cup on the left, to change your choice.

Would you switch? The majority of people do not; about 90 percent do not switch, according to studies. Personally, I do this experiment with my class and at other presentations, and I have yet to have someone switch when offered the opportunity.

Why is that? The odds of being right are 50-50, so why not switch?

More here.