Clinging to Slim Chances: The Dynamics of Anticipating Regret When Developing New Products

Authors

  • Kumar Sarangee,

  • Jeffrey B. Schmidt,

  • Jeffrey P. Wallman


  • The authors appreciate the feedback and support of Tony di Benedetto, JPIM Editor, and two anonymous reviewers, who helped to improve this article. This article was improved due to comments and suggestions made by research seminar participants at the University of New Orleans, the AMA Summer Educators' Conference, and the Product Development and Management Association Conference. Aaron Gleiberman provided valuable research assistance.

Address correspondence to: Kumar Sarangee, Marketing Department, Leavey School of Business, Santa Clara University, Lucas Hall, 500 El Camino Real, Santa Clara, California 95053. E-mail: ksarangee@scu.edu. Tel: 408-554-6953.

Abstract

This paper focuses on the effects of anticipated regret during large-scale investment projects—namely new product development. Anticipated regret means worrying about the future, and decision-makers experience it prior to both making a decision and knowing the outcome of that decision. It is forward-looking while actual regret is backward-looking. Decision-makers must make project continuation/termination decisions with conflicting pressures. If they continue it, they might receive disconfirming information in the future and therefore regret their decision. If they stop it, they also might regret that decision later, too, if they subsequently conclude it was an error to do so. We term these conflicting pressures anticipated “keep” and “drop” regret, respectively. In the main study, nearly 300 individuals completed a decision-making exercise in which a failing new product development project was evaluated, and various factors were measured, including both types of anticipated regret at multiple points in the project. The results show that decision-makers anticipate regret when making project continuation decisions, and anticipated keep and drop regret exert pressures that differ in direction and magnitude. Most interestingly, anticipated drop regret does not diminish as the failing project progresses whereas anticipated keep regret increases as more negative information is received over the course of the project. A second, smaller study was conducted using a different population, and the results of the main study were replicated in this supplemental study, thereby adding confidence in these findings.

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