I’m sure you will regret it sometime if you don’t read this article.

What is it?

Have you ever made a decision where you were fully aware of a possible later regret on your decision? Like the impulsive purchase of something with a time-limited special price or the backpacking trip to a far-away country that you absolutely had to do because one day you might regret not going.

Then you know what regret aversion is: you make a certain decision to avoid regretting an alternative decision in hindsight. You want to avoid the powerless and discomforting state of regret and thus make your decisions mainly to avoid this outcome, and not because this decision was rationally the better one.

Why does it happen?

Regret aversion is related to other biases we discussed already in previous newsletters: the loss aversion, the omission bias, and the action bias. occurs via fear of either commission or omission. We worry about suffering from a failure, such as making a bad investment, or from missing an opportunity because of not acting.  

How can we avoid it?

Being aware of regret aversion already helps a lot. We all know the feeling of regret and if we put this emotion (or better: our attempt to avoid it) into our rational thinking, we made half of the deal.

An easy but effective way to train our muscle of managing regret is to constantly review our decisions after a certain time (a diary can help us here). We would be astonished to see how many “bad” decisions we already made and that how few of them we still regret. This has been proven by studies which showed that individuals often overestimate their future regret, as they cannot imagine how they really feel in the future.

It can also be helpful to generally take a more Buddhist approach and try to avoid regret altogether, not by adjusting decisions, but by accepting any kind of result. Whatever happened in the past is just history. We cannot undo our decisions of that time, but we can adjust our view of it and try to minimize the discomfort of regret.

What’s your thinking around that?

Does this sound familiar to you? Any own experiences or stories you would like to share? Please start a conversation in the comments section!