Consequences of regret aversion in real life: The case of the Dutch postcode lottery

Abstract

Although ample research has shown that decisions may cause regret and that the anticipation of regret may influence decision-making, this previous research was largely limited to hypothetical choices with student participants. The current research replicates and extends these findings for real life lottery participation decisions in non-student samples. Four studies are reported in which two lotteries in the Netherlands, the Postcode Lottery and the National State Lottery, were compared. The State Lottery is a traditional lottery in which one has to buy a ticket with a number printed on it. In the Postcode Lottery, one's postcode is the ticket number, and hence even if not participating one may still find out that one would have won had one played. As our research shows, this particular feedback that is present in the Postcode Lottery but absent in the State Lottery influences the level of anticipated post-decisional regret, and moderates the influence that anticipated regret has on lottery participation. Study 1, 100 street interviews, confirmed our expectations that the Postcode Lottery may elicit regret. Study 2 found under controlled conditions, that people anticipate more regret over not playing when there is feedback about the neighbors winning a prize in the Postcode Lottery than in the State Lottery. However, when this feedback is absent they anticipate equal amounts of regret over not playing. Study 3 replicated these findings for regret, while showing that the two lotteries do not differ with respect to envy and jealousy, emotions that might also be invoked in this context. Study 4 validated that, as we predicted, anticipations of post-decisional regret influence decisions to play the Postcode lottery, but not the State Lottery. These findings demonstrate the external and discriminant validity of anticipated regret for decision-making, and indicate its pragmatic relevance. The implications or recent developments in regret research are discussed.