Theoretical Economics, Volume 6, Number 1 (January 2011)

Theoretical Economics 6 (2011), 95–108


Transitive regret

Sushil Bikhchandani, Uzi Segal

Abstract


Preferences may arise from regret, i.e., from comparisons with alternatives forgone by the decision maker. We ask whether regret-based behavior is consistent with non-expected utility theories of transitive choice and show that the answer is no. If choices are governed by ex ante regret and rejoicing then non-expected utility preferences must be intransitive.

Keywords: Regret, transitivity, non-expected utility

JEL classification: D81

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