Explain the concept of regret aversion and its connection to loss aversion.

Explain the concept of regret aversion and its connection to loss aversion.

Regret aversion is a cognitive bias where individuals tend to avoid making decisions that may lead to regret or disappointment. It is closely connected to loss aversion, which is the tendency for individuals to strongly prefer avoiding losses over acquiring equivalent gains. Both regret aversion and loss aversion stem from the same underlying psychological mechanism, as individuals are more motivated to avoid negative emotions associated with regret and loss than to pursue positive emotions associated with gains. In essence, regret aversion amplifies the impact of loss aversion by making individuals more cautious and risk-averse in decision-making to minimize potential regrets.