The neural basis of regret and disappointment and its influence on pricing decisions: insights from self-agency and other-agency responsibility pricing experiments

By incorporating neuroscientific methods into the classical pricing framework, we studied participants' neural responses to regret and disappointment, measured by ERP waveforms and scalp potential spatial distributions. We observed significant neural activation for underpricing and overpricing regret, as well as marginally significant neural activation for underpricing disappointment, whereas no notable activation was found for overpricing disappointment. We found heterogeneity in individual ERP responses and used negative differences in FRN amplitudes across cases as representative variables for underpricing and overpricing regret. These measures were then employed to investigate their effects on participants' pricing behaviors. Our findings contradict the common belief in behavioral economics that individuals strategically make decisions to avoid regret-related negative emotions.