Wednesday, April 24, 2013

Ex Post Regret in an Ex Ante World

Euvoluntarity is subjective. I don't know for sure if I'll really regret a purchase until I get it out of the wrapping and start using it. But I'm a person. I have expectations. I have an idea on average how much value I should be able to extract from a trade. I know my demand schedule, more or less. More importantly, I know my demand schedule better than anyone else does.

Government regulation is objective. It's precautionary. It substitutes the galaxy of millions of individual expectations calculi with one convenient average of averages. It's ex ante, compared to the ex post remedies sought in tort. Product bans bar people from discovering whether or not a particular exchange is euvoluntary for them.

Maybe it doesn't matter. Maybe regret serves no real purpose. Maybe our lives would be better off without ever feeling regret. Maybe that aversion is so strong that there's a moral justification for protecting others from feeling regret based on our own estimates of what the average person should or would regret.

That's something to consider in more detail. Look people, the market is pretty good about reconciling the vice of avarice with the virtue of prudence, but there exist a whole bunch of vices with associated virtues out there, some with functioning institutions keeping them in check, some without. Some of these institutions have been eroded, others are more or less intact. Many of them have threads running through ideas of euvoluntary exchange, so I think it might be a fine idea to tug on a few of these threads and see what we can find. Maybe  we'll get a better idea of the circumstances when regret aversion by proxy is and isn't sufficiently strong to support intervention by persons not party to an exchange.

Now I just need a snappy title for a new EE series on virtue and vice. Suggestions welcome.

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Do you have suggestions on where we could find more examples of this phenomenon?