#113: A Regretful Reminder, Regret Minimisation Framework & the Action Effect
3 Ideas in 2 Minutes on Regret
I. Regretful Reminder
We tend to have an ambivalent relationship with regret. Author Daniel Pink explains why:
If our lives are the stories we tell ourselves, regret reminds us that we have a dual role. We are both the authors and the actors. We can shape the plot but not fully. We can toss aside the script but not always. We live at the intersection of free will and circumstance.
—Daniel Pink, The Power of Regret
II. Regret Minimisation Framework
The Regret Minimisation Framework is a decision-making tool developed by Amazon founder Jeff Bezos. It works by imagining yourself several years in the future and asking yourself a simple question:
In X years, will I regret doing this?
If the answer is NO, you should give your idea a pass. If the answer is YES, go for it! As for Bezos, he decided that he would regret not having participated “in this thing called the internet”. So he took a leap of faith and started an online bookstore.
III. Action Effect
The Action Effect is a bias psychologists Daniel Kahneman and Amos Tversky have studied in the context of regret as an emotion. They came up with the following scenario:
Mr. Paul owns shares in company A. During the past year he considered switching to stock in company B, but he decided against it. He now finds out that he would have been better off by $1200 if he had switched to the stock of company B.
Mr. George owned shares in company B. During the past year he switched to stock in company A. He now finds that he would have been better off by $1200 if he had kept his stock in company B.
Who feels greater regret?
—Tversky, Kahneman, The Psychology of Preferences
In the experiment, 92% of the participants thought Mr George would be more likely to regret his decision. The results suggested that we perceive actions leading to negative outcomes as more regrettable than inaction. Even though the effect is the same. 🐘
Have a great week,
Chris
themindcollection.com