When your heart isn't smart: How different types of regret change decisions and profits

The purpose of this paper is to explore the decision‐making implications of “regrets of the heart” versus “regrets of the head” in economic decision making.

The phenomenon in three empirical studies is examined. Study 1 is a protocol analysis of people's “regrets of the heart” and “regrets of the head”. Study 2 uses the same recall prompt and examined decision makers' choices in an ultimatum bargaining game. Study 3 tests regrets of heart versus the head in an interactive face to face negotiation setting.

Overall, it is found that people who were prompted to recall a time in which they regretted “not following their heart” were more likely to recall situations in which they experienced a loss or lost opportunity compared to people who recalled a time when they regretted “not following their head”. Recalling a regret of the heart prompts decision makers and negotiators to put a greater value on maintaining relationships and avoid loss in an interpersonal exchange situation.

These findings contribute to the literature on how emotions affect economic decision making and provide a more nuanced examination of regret.

Focusing on “regrets of the head” may lead to greater economic gains in economic decisions.

This article examines a different type of regret and demonstrates how this type of regret impacts economic decision‐making behavior.