Regret Minimization - The Economics of Moral Aptitude

Why Regret Minimization is important

Moral turpitude is a phrase which represents behaviors which go against the moral sensibilities of the community. Regret in a moral context could be defined as adopting behavior which triggers shame as a consequence of moral turpitude. For this post I'm going to go with the working that moral aptitude represents behaviors which are cost efficient in the sense that the level of regret is effectively minimized. In decision theory "regret" has a specific meaning which simply means that upon further information the previous decisions made are no longer seen as the best course of action.

Try as we might to make the best decisions we can under uncertainty we ultimately will regret a lot of our decisions due to simply not having the best information or the right information at the right time. Regret is generally seen as a negative emotion (perhaps one of the worst emotions a person can experience) and because of this we have a motivation to do what we can to minimize the experience of these emotions.

Goal oriented behavior

The problem with morality as stated prior is that our decisions must be made under uncertainty (we cannot accurately predict or know the consequences of our actions). When behaviors emerge it is usually because there is some goal driving the behavior.

Regret Theory

Regret Theory is an area of economics detailing how regret plays a role in decisions. Specifically the topic of regret aversion is interesting because we can clearly see regret aversion bias in investing for example. Humans tend to have this regret aversion bias. Humans have the ability to anticipate negative emotions and adopt decision making strategies in an attempt to avoid experiencing these emotions and regret aversion is an example of this.

"Will I Regret It?" is the main question which we can use to model the mental state of someone experiencing regret aversion. A person who has this phrase in their inner voice has the motivation to develop regret minimization strategies. These regret minimization strategies in the context of consequentialism is in my opinion a form of moral heuristics (morality). For example a person might have the inner voice which asks "What would Person X think of me if I did that?" where person x is anyone the individual seeks to impress. The fear of making a bad impression is recognition of the risk of shame as a cost of a bad decision.

Regret Minimization and Steem

To use cryptocurrency is a risk in itself. Regret minimization can play into the decision some were willing to make prior to 2014 to get involved with crypto. Back then cryptocurrency like Bitcoin was seen as high risk, was associated with crime, and it was seen as a huge risk to even be associated with Bitcoin. People who were willing to take the risk had to develop some mental model (assuming they arrived at the decision rationally and not ideologically). Regret mimization can take the form of "Will I regret not having bought at least 1 Bitcoin in 20 years time?", and there is either a yes or no answer for this. If you decide yes you'd regret not owning at least 1 Bitcoin in 20 years (just in case) then you probably would have also logically arrived at the conclusion that buying that Bitcoin in 2013 could be cheaper financially (more expensive socially) than in 20 years.

The social expense back then would be a potential cost and if Bitcoin were to become banned or completely fail back then then a lot of people would be experiencing regret. At the same time people who did buy back then and who were in a position to watch Bitcoin go to $10,000 or even $20,000 might regret not having made the decision to buy more than 1 Bitcoin and so you can see regret minimization can promote risk taking behavior or risk averse behavior depending on what that individual thinks they have to lose.

Expected regret and anticipated regret are concepts which play into this as well with opportunity cost included. These concepts I will go on to discuss in future posts. Steem and earning Steem (or buying it) all involve calculations, the ability to predict the price movement of Steem is not possible, but abstractly the investment in Steem is similar to investing in any other behavior where you decide based on both your mental model and the costs vs benefits whether or not it's worth the investment. Morality is a bit more complex but in my opinion cost benefit analysis is at the core of decision making in general (if it's rational decision making).

References

Pletti, C., Lotto, L., Tasso, A., & Sarlo, M. (2016). Will I regret it? Anticipated negative emotions modulate choices in moral dilemmas. Frontiers in psychology, 7, 1918.