Learning from Mixed Feedback: Anticipation of the Future Reduces Appreciation of the Present

Abstract

Consumers can learn from their past decisions and prepare for future decisions by comparing their obtained outcome to other possible outcomes. In this paper, we examine whether this comparative feedback is processed differently by those who try to learn from it to prepare for future decisions than by those who don't expect similar decisions in the future. Using a store price comparison context, we demonstrate that the expectation of similar future choices increases consumers' sensitivity to comparisons with better alternatives, resulting in an overly negative perception of their chosen option. We observe that this effect is not driven by changes in anticipated regret, involvement, counterfactual generation, or biased retrieval. However, the effect does depend on consumers' prior beliefs about the relative attractiveness of the options. We conclude that consumers who anticipate future choices selectively test the hypothesis that their current choice can be improved upon. As a result, these forward-looking consumers pay relatively more attention to unfavorable comparisons and fail to appreciate the value of their current choice.

JEL Classification: M31, D83, D91