Regret theory
We choose to minimize anticipated regret from comparing what we got with what we passed up.
What it means
Regret theory models choice under uncertainty as driven not only by an option's own outcomes but by the anticipated regret or rejoicing from comparing the realized outcome with what a foregone option would have yielded. Decision-makers form a modified utility that adds a regret term for each state of the world, and they choose to minimize expected regret. This neatly explains several violations of expected utility — including some preference reversals and the appeal of avoiding feedback about roads not taken — without invoking probability weighting. A signature prediction is that providing or withholding information about foregone outcomes changes choices, since regret requires comparison. Regret theory is a leading rival and complement to prospect theory among non-expected-utility models.
Examples
Someone keeps their usual lottery numbers rather than switch, dreading the sharp regret of seeing their old numbers win after changing them.
An investor clings to a sinking share, dreading the day it rebounds and proves the sale a mistake — and pointedly avoids checking the price of the one she did sell.
A driver stays in the crawling lane rather than switch, because being overtaken by the lane he has just left would sting far more than simply sitting still does.
First described in Loomes & Sugden (1982); Bell (1982).