Regulatory focus and decision rules: Are prevention-focused consumers regret minimizers?

Abstract

The Random Regret Minimization (RRM) discrete choice model, which assumes the emotional rationality of a decision maker, is introduced into consumer decision making. The potential consumer-specific drivers of the decision rules between utility maximization and regret minimization are scrutinized to better understand consumer decision-making processes. Drawing on Regulatory Focus Theory (RFT), we predict that chronically prevention-focused consumers are more likely to be regret minimizers, as they are more inclined to minimize negative outcomes, and that chronically promotion-focused consumers are more likely to be utility maximizers, as they are more inclined to maximize their opportunities and outcomes. Employing a finite mixture modeling approach, we find empirical support for the hypotheses. We also find a significant portion of regret-minimizing consumers showing different preferences for product design. The empirical findings highlight the importance of incorporating consumer segments with different decision rules as different marketing strategies may be required for product design and positioning.