Pain of Losing Far More Powerful Than the Thrill of Winning, Study Finds

When people make risky decisions, two forces often pull at them at once: the fear of losing something and the regret of wondering “what if.” A new study published in the “Journal of Risk and Uncertainty” finds that both forces can shape a person’s choices at the same time — and that the fear of loss tends to win out.The research set out to test two of the most influential ideas in the science of decision-making side by side. For decades, researchers have debated whether people’s choices are driven more by loss aversion — the well-documented tendency to feel losses more sharply than equivalent gains — or by regret, the discomfort of imagining a better outcome you didn’t choose. This study suggests the answer may be both.In the study, 228 participants took part in 13 sessions at Pennsylvania State University’s Laboratory for Economics Management and Auctions. Each person was shown pairs of spinning wheels divided into sections representing different possible payouts, some positive, some negative. They had to pick one wheel to spin, and the result affected their actual pay for the day.Participants started with 350 points as a financial cushion, since some gambles could result in a loss. Points were converted to cash at a rate of 50 points per dollar, and the average participant walked away with $23, plus a $10 show-up fee.To tease apart loss aversion from regret aversion, researchers varied how much participants learned after each choice. Some participants saw nothing after they chose — no result at all. Others watched their chosen wheel spin but never saw what the other wheel would have landed on. A third group saw both wheels spin, meaning they could see exactly what they won and exactly what they missed out on.When participants received no information about outcomes, their behavior lined up with loss aversion. But when they could see the result of the wheel they didn’t pick, attitudes shifted. Their decisions could no longer be explained by loss aversion alone — regret was also playing a role.“Subjects appeared to be more regret averse when making choices that revealed outcomes when they had already experienced the no feedback treatment,” the authors reported.In short, knowing what they missed out on made a difference in how they felt about their choices. As a result, the ability to compare their outcome with the alternative triggered regret, and that regret influenced future choices. Loss aversion still appeared to be the stronger force in this experiment, but regret was statistically meaningful and not just noise.The study noted some differences between men and women. Women appeared slightly more likely to avoid choices that could lead to regret, while men in some conditions showed more evidence of feeling satisfied about the choice they made. The researchers noted, however, that gender was not the central focus of the study, and these patterns should not be taken as sweeping conclusions about how men and women make decisions.The findings suggest that models of human decision-making that account for only one of these forces — loss aversion or regret — may be missing part of the picture. Whether the same patterns hold in real-world situations, such as buying insurance or selling a stock, remains to be seen.

Pain of Losing Far More Powerful Than the Thrill of Winning, Study Finds

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