Even better than the real thing: Alternative outcome bias affects decision judgements and decision regret

Abstract

Three experiments demonstrated that decisions resulting in considerable amounts of profit, but missed alternative outcomes of greater profits, were rated lower in quality and produced more regret than did decisions that returned lesser (or equal) amounts of profit but either did not miss or missed only slightly better alternatives. These effects were mediated by upward counterfactuals and moderated by participants’ orientation to the decision context. That decision evaluations were affected by the availability and magnitude of alternative outcomes rather than the positivity of actual outcomes is counter to the outcome bias effect—a bias in which decisions are rated more positively when they led to more positive outcomes (despite a priori probabilities associated with the decision outcomes). Experiment 3 demonstrated that these effects represent a bias that occurs even when it is clear that the process by which decisions were made followed rational decision processes. This research suggests that when alternative worlds are even better than the desirable outcomes experienced, affect and cognition may be more strongly linked to the magnitude of alternative realities than to obtained outcomes.

Keywords:

• Counterfactual thinking
• Outcome bias
• Decision-making

No potential conflict of interest was reported by the authors.

Notes

¹ Two researchers read these statements and evaluated whether the statements included upward counterfactuals; a single judge evaluated whether the statements reflected a misunderstanding of the information (e.g., indicated that more profit could have been earned by an option that was described as returning the least profit). One of the judges evaluated the statements of all participants and the other evaluated 30 samples. It was necessary for one judge to be aware of the experimental condition in order to determine whether the participants’ statements reflected accurate understanding of the scenario. The second judge was blind to experimental conditions. This procedure was also utilised in Experiment 3. In both experiments, there was a high level of inter-rater reliability (90% in Experiment 1 and 93% in Experiment 3).