Norm theory and the action-effect: The role of social norms in regret following action and inaction

Abstract

The action-effect (Kahneman & Tversky, 1982) is one of the most widely cited and replicated effects in the regret literature, showing that negative outcomes are regretted more when they are a result of action compared to inaction. Building on theoretical arguments by norm theory (Kahneman & Miller, 1986) and the concept of normality, we examine the role of social norms for action and inaction in affecting regret. In four experiments we manipulated social norms and action-effect scenarios and found that social norms matter. For decisions resulting in negative outcomes, action is regretted more than inaction when social norms are for inaction, but when social norms are for action the effect is significantly weakened (Experiments 1 and 4) or reversed (Experiments 2 and 3).