What is... | September 7, 2016

What is buyer’s remorse?

We all recall that nagging feeling after an important decision or a large purchase. We call it having second thoughts, but behavioural economists call it buyer’s remorse.

Buyer’s remorse is the regret and anxiety that can seep in about a purchase or a decision that cannot be easily reversed. It can occur when choosing a career, buying a home, shopping or even on holiday.

Why does it happen?
This feeling of self-doubt and uneasiness stems from cognitive dissonance, a mental state due to the clash of conflicting thoughts. For example, when you buy something expensive like a ring or a car, initially you may feel elated – but then you suddenly feel uncomfortable about spending so much money. It is these conflicting thoughts that give rise to buyer’s remorse.

The sheer availability of choice in everything from careers to places to live or holiday destinations can also manifest itself through buyer’s remorse. Impulse buying in a hot state, when high levels of emotion affect our rational decision making processes, is also another culprit.

The Blissful Ignorance Effect is a kind of a wishful thinking that happens when consumers want to like what they’ve bought. The more information you have, the harder it is to kid yourself.

Optimism bias is another reason we experience buyer’s remorse. This psychological bias continues to give us a sense of hope that what we are buying will be worth the money we are spending. In an auction, if we overbid for an item, caught up in the thrill of competition, the joy of victory can quickly turn into dissatisfaction. This phenomenon, known as the winner’s curse, is often accompanied by buyer's remorse.

Can we get rid of it?
Many decisions have positive and negative consequences. Whenever you’re making a decision, irrespective of how significant it is, for which there is no single right answer, it is followed by post-decision dissonance. Social psychologists Carol Tavris and Elliot Aronson’s 2007 book, Mistakes Were Made (But Not By Me):, explain the all-too-human need to justify past actions whenever we hold two “cognitions” ( ideas, beliefs, opinions) that contradict each other.

That is how people make themselves believe that costly handbag or eye-wateringly expensive meal was worth it or that at least it’ll make them happy.

Ignorance is bliss
Although it is unfashionable to not do your research in the digital age, you can prevent that gut-wrenching feeling after your shopping spree by knowing less. Research suggests that buyers who have more ambiguous information about a product expect to be happier with their purchase than those who know more details.

A 2008 US university study by Himanshu Mishra, Baba Shiv and Dhananjay Nayakankuppam, The Blissful Ignorance Effect, finds that a kind of a wishful thinking happens when consumers want to like what they’ve bought. The more information you have, the harder it is to kid yourself.

Aronson, who has spent a lifetime looking at how people justify their decisions, is not surprised by these findings. He says: “If you have just a little information then you’re a little disappointed but you can convince yourself that it wasn’t your fault, or that the item may be better than you thought for other reasons.” 

Pattern of regret
But the regret pattern is not the same for all kinds of purchases. Research has found that people are more likely to regret material purchase decisions: “regrets of action” or buyer’s remorse. On the flip side, experience-based purchases, such as holidays, lead to feelings of regret that are related to inaction – that is the realisation of a missed opportunity.

The lesson? Avoid making purchases in a hot state, but if you end up doing so don’t worry too much because you’ll eventually convince yourself it was worth it. And do the research on things with big price tags but don’t dissect the small stuff– you’ll be happier knowing less.

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EmotionBehaviourBuyer's remorse