A Generalized Utility Model of Disappointment and Regret Effects on Post-Choice Valuation

In this paper we show that performance information about "forgone" alternatives (i.e., alternative that were considered but not chosen) can have a significant impact on post-choice valuation. Our approach introduces a new and parsimonious way of looking at satisfaction that combines the literature on post-choice valuation with research regarding generalized expected utility theory. While the post-valuation literature focuses on the selected brand as the valuation's basis (e.g., Anderson and Sullivan [Anderson, E. W., M. W. Sullivan. 1993. The antecedents and consequences of customer satisfaction for firms. Marketing Sci. 12 (Spring) 125–143.], Bolton and Drew [Bolton, R., J. Drew. 1991. A multistage model of customers' assessments of service quality and value. J. Consumer Res. 17 375–384.]), we draw on a stream of research in generalized expected utility theory that considers both chosen and forgone alternatives as the basis for valuation (e.g., Bell [Bell, D. 1983. Risk premiums for decision regret. Management Sci. 29 1156–1166 and Bell, D. 1985. Disappointment in decision making under uncertainty. Oper. Res. 33 1–27.]; Loomes and Sugden [Loomes, G., R. Sugden. 1982. Regret theory: An alternative theory of rational choice under uncertainty. The Econom. J. 92 805–824 and Loomes, G., R. Sugden. 1986. Disappointment and dynamic consistency in choice under uncertainty. Rev. Econom. Stud. 53 271–282.]). The result is a combined model of post-choice valuation that explicitly incorporates both concepts. Specifically, we extend the existing paradigm of post-choice valuation to include buyers' regret concerning forgone alternatives, proposing a generalized utility theory-based treatment of post-choice product assessment that uses the intuitively appealing concepts of disappointment and regret as the basis. We propose a model for conceptualizing post-choice valuation that is consistent with the existing literature, discuss how this model extends the construct to consider the influence of forgone alternatives, and report results of an empirical test that contrasts our model to important recent work in the area (e.g., Boulding et al. [Boulding, W., A. Kalra, R. Staelin, V. A. Zeithaml. 1993. A dynamic process model of service quality: From expectations to behavioral intentions. J. Marketing Res. 30 (February) 7–27.]). Our generalized model of post-choice valuation is based on the sum of three components that represent factors that may contribute to consumers' assessm