When your heart isn't smart: How different types of regret change decisions and profits.

The purpose of this paper is to explore the decision-making implications of regrets of the heart versus regrets of the head in economic decision making. Design/methodology approach: The phenomenon in three empirical studies is examined. Study 1 is a protocol analysis of people's "regrets of the heart" and "regrets of the head". Study 2 uses the same recall prompt and examined decision makers' choices in an ultimatum bargaining game. Study 3 tests regrets of heart versus the head in an interactive face to face negotiation setting. Overall, it is found that people who were prompted to recall a time in which they regretted "not following their heart" were more likely to recall situations in which they experienced a loss or lost opportunity compared to people who recalled a time when they regretted "not following their head". Recalling a regret of the heart prompts decision makers and negotiators to put a greater value on maintaining relationships and avoid loss in an interpersonal exchange situation. These findings contribute to the literature on how emotions affect economic decision making and provide a more nuanced examination of regret. Focusing on "regrets of the head" may lead to greater economic gains in economic decisions. This article examines a different type of regret and demonstrates how this type of regret impacts economic decision-making behavior.