Counterfactual thinking and emotions: regret and envy learning

Abstract

Emotions like regret and envy share a common origin: they are motivated by the counterfactual thinking of what would have happened had we made a different choice. When we contemplate the outcome of a choice we made, we may use the information on the outcome of a choice we did not make. Regret is the purely private comparison between two choices that we could have taken, envy adds to this the information on outcome of choices of others. However, envy has a distinct social component, in that it adds the change in the social ranking that follows a difference in the outcomes. We study the theoretical foundation and the experimental test of this view.