Abstract

Three experiments demonstrated that decisions resulting in considerable amounts of profit, but missed alternative outcomes of greater profits, were rated lower in quality and produced more regret than did decisions that returned lesser amounts of profit but either did not miss or missed only slightly better alternatives. These effects were mediated by upward counterfactuals and moderated by participants’ orientation to the decision context. That decision evaluations were affected by the availability and magnitude of alternative outcomes rather than the positivity of actual outcomes is counter to the outcome bias effect—a bias in which decisions are rated more positively when they led to more positive outcomes. Experiment 3 demonstrated that these effects represent a bias that occurs even when it is clear that the process by which decisions were made followed rational decision processes. This research suggests that when alter..