minimax regret

business

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June 30, 2026

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Minimax regret is a decision-making strategy that aims to minimize the worst possible regret one might feel after a choice is made. This approach is particularly useful in situations involving uncertainty, such as financial markets, where hindsight can lead to second-guessing. Instead of striving for the absolute best outcome, minimax regret focuses on reducing future emotional distress by choosing the option that least increases the likelihood of experiencing maximum regret.1

This theory is rooted in behavioral economics and the concept of loss aversion, which suggests that the pain of losses is felt more intensely than the pleasure of equivalent gains. By considering potential scenarios and selecting the one that minimizes the potential for significant regret, individuals can align their decisions with their emotional tolerance, not just their financial goals. The concept was popularized by Amazon founder Jeff Bezos, who used it to decide whether to leave a lucrative job to start an e-commerce company.1

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…pessimism and then apply the minimax principle. A third approach, “minimax regret,” attempts to minimize the maximum deviation from the outcome that would have been selected if a state of certainty had existed before the choice had been made.
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…pessimism and then apply the minimax principle. A third approach, “minimax regret,” attempts to minimize the maximum deviation from the outcome that would have been selected if a state of certainty had existed before the choice had been made.
Read More