Recently, LiuLin and his coauthors had a paper (under the title “Consumer Search with Anticipated Regret”) published in Production and Operations Management.
People often feel regret about their decisions. However, such a feeling might be anticipated before those decisions are made. Under this case, anticipated regret might affect people’s decision making process. This paper explores how consumers’ anticipated regret about their purchase decision affects their product information acquisition and evaluation process, and how this in turn influences firms’ price competition, consumer surplus and social welfare. Our results show that when consumers can choose how much information to evaluate on each product, anticipated regret might soften firms’price competition. In addition, anticipated regret can achieve a “win-win-win” situation for consumers, firms, and social planner. That is, anticipated regret might not serve as a curse but a blessing: consumers benefit from reduced prices; firms become more profitable because lower prices expand the market; social welfare increases because consumer surplus and firms’profits both increase.
About the author:
Lin Liu is a professor at School of Economics and Management, Beihang University. He received his PhD from the Marshall School of Business at University of Southern California under the guidance of Professor Anthony Dukes. His research interests focus on digital platforms, information search, competition and policy, and behavioral economics.
