Using a multiple-trial stock market decision paradigm, the possibility that counterfactual thinking can be dysfunctional for learning and performance by distorting the processing of outcome information was examined. Correlational (Study 1) and experimental (Study 2) evidence suggested that counterfactuals are associated with a decrease in experiential learning. When counterfactuals were made salient, participants displayed significantly poorer performance compared to their counterparts for whom counterfactuals were relatively less salient. A counterfactual salience ? need for cognition (NFC) interaction qualified these findings. High (...) NFC participants outperformed their counterparts when counterfactuals were not salient. Evidence for a memory-based mechanism was also supported. (shrink)

Estimates of unknown quantities are influenced by both self-generated anchors (SGAs) and externally provided anchors (EPAs; e.g., the advice of others). It was hypothesised that people use the degree of similarity between these anchors to render final responses. Thus we tested predictions drawn from metacognitive accounts of anchoring using procedures similar to the traditional anchoring paradigm. In a single experiment we manipulated SGA–EPA similarity, EPA level, and EPA source credibility. Results showed that the relationship between SGA–EPA similarity and the decision (...) weight given to the EPA, relative to the weight given to the SGA, depended on source credibility. Bolstering the metacognitive framework, participants were most confident about their final responses when their SGA was similar to the EPA and the EPA came from a highly credible source. These results support a metacognitive account of the anchoring heuristic. (shrink)

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.. (shrink)