Transitive regret

Abstract

Preferences may arise from regret, i.e., from comparisons with alternatives forgone by the decision maker. We ask whether regret-based behavior is consistent with nonexpected utility theories of transitive choice and show that the answer is no. If choices are governed by ex ante regret and rejoicing, then nonexpected utility preferences must be intransitive. © 2011 Sushil Bikhchandani and Uzi Segal.