Thinking and Deciding

EMOTIONAL EFFECTS OF OUTCOMES 275
Emotional effects of outcomes
Prospect theory may not capture all of the interesting departures from the simplest
form of expected-utility theory. The rest of this chapter will consider other effects
on decision making. The first kind of effect concerns our reactions to outcomes.
Expected-utility theory, in its simplest form, assumes that the utility of an outcome
does not depend on what other outcomes might have occurred. In fact, though, we
react emotionally to comparisons between what happens and what might have happened.
(We shall see other examples of this in the next chapter.)
We may compare outcomes to what would have occurred in different states of
the world, that is, to events in the same row but different columns of the utility
table. We may also compare outcomes to what would have occurred if a different
option had been chosen, that is, events in different rows but the same column. These
comparisons lead to emotions of regret, rejoicing, disappointment, and elation. If
these emotions are going to occur, we should anticipate them and count them as
part of the utility of the outcomes that we experience, for we have goals concerning
these emotions. Some emotions are desired, and others are undesired. Expected
utility as a normative theory must include these emotional effects in order to maintain
its connection with its purpose, maximizing goal achievement. Descriptively, too,
people may anticipate these emotions and take them into account.
Regret and rejoicing
According to regret theory,weregret our decision if we learn that the outcome would
have been better if we had chosen differently: for example, if we decide to carry
an umbrella and find that it does not rain or if we decide not to carry an umbrella
and find that it does rain. We rejoice in our decision if we learn that the outcome
would have been worse if we had chosen differently: for example, if we carry an
umbrella and it rains, or if we do not carry an umbrella and it does not rain. When
we make a decision, we anticipate these feelings and take them into account (Bell,
1982; Loomes and Sugden, 1982).
This anticipation in itself does not necessarily lead to any departures from expected-utility
theory. (We noted in connection with Table 10.1 that we can compare
options column by column in the utility table.) According to regret theory, however,
we overweigh these anticipated feelings of regret and rejoicing when the difference
between outcomes is large. For the umbrella decision, the large differences between
outcomes probably occur if it rains. In this “state of nature,” we rejoice greatly if
we have an umbrella but regret our decision if we do not. If it does not rain, the
difference between outcomes is relatively small (carrying an umbrella needlessly or
not), so here we do not take our feelings into account. In this case, our anticipation
of regret and rejoicing would make us more inclined to take the umbrella than would
an analysis of expected utility that ignored these feelings.
Both regret and rejoicing apply to our decision making itself. It is as though we
pride ourselves on a well-made decision, if the outcome is good, and blame ourselves