A Quantitative Measurement of Regret Theory
This paper introduces a choice-based method that for the first time makes it possible to quantitatively measure regret theory, one of the most popular models of decision under uncertainty. Our measurement is parameter-free in the sense that it requires no assumptions about the shape of the functions reflecting utility and regret. The choice of stimuli was such that event-splitting effects could not confound our results. Our findings were largely consistent with the assumptions of regret theory although some deviations were observed. These deviations can be explained by psychological heuristics and referencedependence of preferences.
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