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

doi:10.1016/j.obhdp.2003.10.001

Organizational Behavior and Human Decision Processes

Volume 93, Issue 2, March 2004, Pages 155-168

https://doi.org/10.1016/j.obhdp.2003.10.001 Get rights and content

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.

Section snippets

Regret

Regret is a negative, cognitively based emotion that we experience when realizing or imagining that our present situation would have been better, had we acted differently. It is an unpleasant feeling, associated with self-blame, the wish to undo the regretted event and a strong tendency to kick oneself. The core element of regret is cognitive in the sense that in order to experience regret one needs to compare the current state of affairs with what it would have been had one decided

“It Could Have Been You”: Regret and lottery play

The realization that one has missed a large prize because one decided not to participate in a lottery can clearly be awfully regretful. Playing the lottery may hence be a manifestation of regret aversion, as has been suggested before (e.g., Sheeran & Orbell, 1999; Wolfson & Briggs, 2002; Zeelenberg & Beattie, 1997). Landman and Petty (2000) describe how counterfactual thinking and the ensuing regret may contribute to lottery play and how counterfactual thinking is exploited in order to market

“It Would Have Been You”: The Dutch Postcode Lottery

Encouraging people to counterfactualize about possible wins and near misses is only one way to exploit them. The Dutch Postcode Lottery has found a way that may even be more efficient in persuading consumers to participate and to continue playing. This lottery is named after their specific procedure of selecting winners. The winning numbers are based on randomly drawn postcodes. A Dutch postcode is a unique combination of four numbers and two letters (e.g., 5037 ND), which denotes a specific

Overview of the current research

In this article we investigate people’s reactions to and motivations for playing in the Postcode Lottery. In order to do so, we compare the Postcode Lottery to the other big lottery in the Netherlands, the National State Lottery. The lotteries are comparable in the sense that both are big national lotteries with prizes that easily run into millions of euros. Also both lotteries have frequent shows broadcasted on National Television during which the drawing is performed. The important difference

Method

The participants in this study were 100 citizens (50 females, 50 males; M_age=38 years, SD_age=16 years, age ranged from 15 to 84 years) of Tilburg and Uden, two cities in the southern part of the Netherlands. Participants were approached at various locations in down town Tilburg or Uden, by one of two trained male interviewers. After having indicated their willingness to participate they were asked if the knew the Postcode Lottery (everybody did). Next they completed a one-page questionnaire,

Method

The participants in this study were members of the CentER-Data Telepanel of the Center for Economic Research of Tilburg University. Members of the Telepanel have been provided with a personal computer and a modem at home. Questionnaires are sent to the panel members by modem, completed on the pc during the weekend, and returned to CentER-Data by modem again. The CentER-Data Telepanel is representative for the Dutch population and consists of about 2500 people of 18 years and older. In total 200

Study 3

An important and interesting aspect in the setup of the Postcode Lottery is that the feedback provided by the lottery is not simply individual, but also social. One may not only miss out on a large prize, but also find out that one’s neighbors did win. Such social comparison information is important in many decisions, since people are very sensitive to the outcomes of others. Decision makers can be extra dissatisfied when others receive a better outcome. These social comparison effects can also

Method

The study had a two-group design (Participant plays in: Postcode Lottery vs. State Lottery). Participants were, as in Study 2, members of the CentER-Data Telepanel. In total 400 panel members were selected for the present study (158 females, 242 males; M_age=50 years, SD_age=13 years). Two hundred of the participants played in the Postcode Lottery, the other two hundred in the State Lottery. None of them had participated in Study 2.

The questionnaire was based on the research by Richard et al.

General discussion

Regret is felt when we realize in retrospect that we should have chosen differently. Feedback information about what would have happened had we chosen differently is therefore a crucial factor in regret. The present research has shown, in a series of four studies, that a specific lottery that provides such information to their (potential) players, the Postcode Lottery, may evoke anticipations of regret and that these anticipations may hence influence participation decisions. Interestingly, a

Coda

Before closing, let us return to one of the major questions that motivated our current research. Could we find support in real life decision-making for the operation of an anticipated regret mechanism? The current studies show an anticipated regret effect in lottery participation decisions. Moreover, it shows that these effects are dependent on the feedback structure of the lotteries. By adopting a full-cycle approach—taking research out of the laboratory and showing the contingency of regret

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^☆: We thank CentER Data panel of Tilburg University for their assistance with data collection of Study 2 and Study 4 and Ron Broeders and Giovanni van der Wielen for the data collection of Study 1. We also thank Peter Ayton, Jon Baron, Rick Larrick, Ilana Ritov, Giovanni van der Wielen, two anonymous reviewers and Scott Highhouse for their valuable comments on an earlier version of the manuscript.

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

Abstract

Section snippets

Regret

“It Could Have Been You”: Regret and lottery play

“It Would Have Been You”: The Dutch Postcode Lottery

Overview of the current research

Method

Method

Study 3

Method

General discussion

Coda

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

Organizational Behavior and Human Decision Processes

The theory of planned behavior

Organizational Behavior and Human Decision Processes

The social psychology of decision making

Regret in decision making under uncertainty

Operations Research

Risk premiums for decision regret

Management Science

Full-cycle social psychology

Lotteries in the real world

Journal of Risk and Uncertainty

Belief, attitude, intention, and behavior: An introduction to theory and research

Biased evaluation and persistence in gambling

Journal of Personality and Social Psychology

The experience of regret: What, when, and why

Psychological Review

Better settle than sorry: The regret aversion theory of litigation behavior

University of Illinois Law Review

The theory of reasoned action: A meta-analysis of past research with recommendations for future modifications and future research

Journal of Consumer Research

A generalized utility model of disappointment and regret effects on post-choice valuation

Marketing Science