Regret theory states that people anticipate regret if they make the wrong choice, and they consider this anticipation when making decisions

Regret theory can impact an investor's rational behavior, impairing their ability to make investment decisions that would benefit them as opposed to harming them.

Regret theory impacts investors because it can either cause them to be unnecessarily risk-averse or it can motivate them to take risks they shouldn't take.

During extended bull markets, regret theory causes some investors to continue to invest heavily, ignoring signs of an impending crash.

By automating the investment process, investors can reduce their fear of regret from making incorrect investment decisions.

the investor could decide to never take seriously any investment recommendation made by this friend, regardless of the investment fundamentals.

To avoid the regret of missing out, the investor could become less risk-averse and might likely buy any stocks that this friend recommends in the future without conducting any background research.

Investors need to look at how regret has affected their investment decisions in the past and take that into account when considering a new opportunity.

Examples of this include the stock market crash of 1929, the stock market crash of 1987, the dotcom crash of 2001, and the financial crisis of 2007-08.