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Why the Pain of Losing Always Outweighs the Thrill of Winning
In A Nutshell
- A new study found that fear of loss and regret can drive decisions at the same time, not separately as researchers typically assumed.
- Fear of loss was the stronger force, but regret became a measurable factor once participants could see what they missed.
- How much information people had about outcomes changed their behavior, suggesting context matters as much as the choice itself.
- Gender differences appeared in the data, with women leaning toward regret aversion and men toward rejoicing, though these findings are narrow and should not be broadly applied.
When people gamble, invest, or decide whether to buy insurance, two powerful forces tug at their choices: the gut-punch of a potential loss and the nagging “what if” of a road not taken. For decades, scientists studied these forces separately. A new study published in the Journal of Risk and Uncertainty finds that, under the conditions of this experiment, both appeared to be operating at the same time, and the fear of loss appeared to carry more weight than regret did.
Conducted by Lisa L. Posey, Anthony M. Kwasnica, and Charles F. Geier, the research puts two of behavioral economics’ biggest theories side by side to show they can work in tandem rather than as competing explanations. Rather than asking people abstract questions about hypothetical preferences, the team had participants make real choices with real money on the line, and carefully controlled exactly how much each person learned about the outcome.
Spinning Wheels Revealed Participants’ Fear of Loss
Thirteen sessions were held at Pennsylvania State University’s Laboratory for Economics Management and Auctions, with a total of 228 participants. Researchers presented people with pairs of gambles displayed as spinning wheels, two circles each divided to show possible payouts and their likelihood of occurring. Participants had to pick one wheel to spin, and the outcome determined part of their pay for the day.
Everyone started with 350 points as a cushion, since some gambles carried the possibility of a loss. Points were converted to cash at a rate of 50 points per dollar. On average, participants walked away with $23, though individual earnings varied based on their choices and outcomes. A $10 show-up fee was also included.
Every participant faced three sets of gamble pairings, each built around a different size of potential loss: high, medium, and low. One gamble in each pair always carried some risk of losing money. A competing gamble started out similarly risky but gradually shifted across 15 rounds until it only offered the possibility of gains. This design let researchers pinpoint the exact moment when participants’ behavior changed, which, under loss aversion, should happen right around the point where the risk of losing money disappears from the other option. That is largely what they found.
Feedback Conditions Showed When Regret Entered the Picture
Participants were split across three different feedback conditions, which changed how much they learned about the outcomes of their choices.
In the no-feedback condition, participants chose a gamble but were not shown what happened next. Because no outcome information was revealed, the opportunity to compare results and wonder about the road not taken was limited. Behavior in this condition aligned more closely with the loss-aversion framework, though this reflects the design’s constraints rather than proof that regret was entirely absent.
In the partial-feedback condition, participants watched their chosen wheel spin and land on an outcome but never saw what the other wheel would have produced, limiting counterfactual thinking.
In the complete-feedback condition, both wheels spun after a choice was made. Participants could see exactly what they got and exactly what they missed. This is the scenario most likely to trigger regret, and the data showed it did.
When feedback entered the picture, participants’ choices reflected both loss aversion and regret. They started making decisions that could not be explained by loss aversion alone. Regret was real and statistically meaningful, though in this experiment’s setup it was secondary to loss aversion.
Gender Patterns in Loss and Regret Were Tentative and Narrow
Women in the study appeared more likely to experience regret aversion, while men in certain conditions showed more evidence of “rejoicing,” the flip side of regret, where a person feels satisfaction about having made the right call. Women also tended to exhibit greater loss aversion than men in the sample. Gender was not the main focus of the experiment, so these patterns should be treated as limited findings from this specific gambling task rather than broad conclusions about how men and women make financial decisions.
Why These Lab Findings Could Matter Beyond the Spinning Wheels
Decades of research have established that people are not the cool, calculating decision-makers older economic models assumed. People hate losing. They ruminate over paths not taken. They make different choices depending on whether they can see the outcome they walked away from. This study adds to that picture by showing these forces are not necessarily competing explanations. Under conditions like those tested here, loss aversion and regret appeared to operate simultaneously. Models relying on only one of these forces may misread how people behave when uncertainty is involved.
Whether these findings extend to real-world decisions like buying insurance, selling a stock, or accepting a job offer remains open, but both the fear of loss and the dread of regret may deserve a place in how researchers model decision-making under risk.
Disclaimer: This article is intended for general informational purposes only and should not be taken as financial, investment, or insurance advice.
Paper Notes
Limitations
Participants were drawn exclusively from Pennsylvania State University’s laboratory subject pool and skewed young. In the within-subject group, participants ranged from 18 to 32 years old; in the between-subject group, from 18 to 51, though 92% were 32 or younger. This limits how broadly the findings can be generalized to older adults or populations outside a university setting. Gender differences in loss aversion and regret were observed, but gender was not the primary focus of the experiment, so those findings should be treated with caution. Additionally, the no-feedback condition was always administered first in the within-subject design, a deliberate choice to prevent earlier feedback from contaminating regret responses, but one that means order effects between the feedback conditions cannot be entirely ruled out in that design.
Funding and Disclosures
This research was funded by grants from the Smeal College of Business at Pennsylvania State University. The corresponding author states there is no conflict of interest.
Publication Details
Authors: Lisa L. Posey (Department of Risk Management, Pennsylvania State University), Anthony M. Kwasnica (Department of Economics, Florida State University), and Charles F. Geier (Department of Human Development and Family Science, University of Georgia) | Paper Title: ‘The coexistence of loss aversion and regret aversion in decision making under risk’ | Journal: Journal of Risk and Uncertainty | Published online: April 10, 2026 | DOI: 10.1007/s11166-026-09476-y
