A GENERALIZED UTILITY MODEL OF DISAPPOINTMENT AND REGRET EFFECTS ON POST-CHOICE VALUATION

In this paper we show that performance information about ''forgone'' a lternatives (i.e., alternative that were considered but not chosen) ca n have a significant impact on post-choice valuation. Our approach int roduces a new and parsimonious way of looking at satisfaction that com bines the literature on post-choice valuation with research regarding generalized expected utility theory. While the post-valuation literatu re focuses on the selected brand as the valuation's basis (e.g., Ander son and Sullivan 1993, Bolton and Drew 1991), we draw on a stream of r esearch in generalized expected utility theory that considers both cho sen and forgone alternatives as the basis for valuation (e.g., Bell 19 83, 1985; Loomes and Sugden 1982, 1986). The result is a combined mode l of post-choice valuation that explicitly incorporates both concepts. Specifically, we extend the existing paradigm of post-choice valuatio n to include buyers' regret concerning forgone alternatives, proposing a generalized utility theory-based treatment of post-choice product a ssessment that uses the intuitively appealing concerts of disappointme nt and regret as the basis. We propose a model for conceptualizing pos t-choice valuation that is consistent with the existing literature, di scuss how this model extends the construct to consider the influence o f forgone alternatives, and report results of an empirical test that c ontrasts our model to important recent work in the area (e.g., Bouldin g et al. 1993). Our generalized model of post-choice valuation is base d on the sum of three components that represent factors that may contr ibute to consumers' assessment of a chosen product or service. The fir st component is expected performance. The second component is disappoi ntment, which captures the discrepancy between actual and expected per formance (much as the disconfirmation construct in traditional satisfa ction research). The third component is regret, which captures the dif ference between the performance of the chosen product/service and the performance of a forgone product/service. This perspective is useful i n that risk is captured by the disappointment and regret terms, provid ing an intuitively appealing decomposition of post-choice valuation an d offering several advances over previous representations of disappoin tment and regret. We test our model via a choice experiment. Participa nts in the empirical study were asked to make choices between successi ve lottery pairs. They were then given outcome feedback on the forgone alternative as well as on the chosen alternative in each lottery pair . Immediately following outcome feedback for each choice, subjects wer e asked to evaluate their decision. Our results clearly suggest an eff ect of regret on post-choice valuation-information about the forgone a lternative influenced subjects' valuation of the chosen alternative. W e also find evidence that, as predicted, the effects of disappointment and regret on post-choice valuation are asymmetric. Specifically, the negative effect of disappointment on post-choice valuation was greate r than the positive effect of elation. Similarly, the negative effect of regret was greater than the positive impact of rejoicing. Our resea rch offers five contributions to the Literature on post-choice valuati on. First, our results illustrate the advantage of using generalized u tility theory as the basis for conceptualizing and modeling post-choic e valuation. We derive a model of post-choice valuation that formally captures the components of disappointment and regret and show that the outcome of both the chosen alternative (through disappointment) and a forgone alternative (through regret) can influence the chosen alterna tive's valuation. Second, we formally integrate the concepts of disapp ointment and regret, which have been examined separately for many year s, into a single model based on a multiattribute preference structure. Third, we argue that the effects of disappointment and regret on post -choice valuation are asymmetric and present empirical evidence in thi s regard. Fourth, our results suggest that word-of-mouth regarding for gone alternatives may affect post-choice valuation, extending research that has not heretofore considered forgone outcomes' role in this pro cess. Finally, our development provides a preconsumption measure of '' potential disappointment and regret'' in modeling choice. At the time of choice, consumers may visualize the feelings of disappointment and/ or regret that will be derived at consumption, taking into account bot h the chosen brand and forgone brands. Our generalized utility theory- based approach to the post-choice valuation construct can be useful in examining the role of disappointment and regret as preconsumption con structs.