Your boss tells you that he is delighted with your performance over the past year and is giving you a $5,000 bonus. Are you pleased? If you were not expecting a bonus, you will be delighted. If you were expecting a $10,000 bonus, you will be disappointed. The satisfaction you feel with the bonus you are given will depend on your prior expectations. The higher your expectations, the greater will be your disappointment. People who are particularly averse to disappointment may learn to adopt a pessimistic view about the future.

If you accept a 50–50 gamble between $0 and $2,000, there is a 50% chance that you will be disappointed when the lottery is resolved. You may prefer to swap the lottery ticket for a sure $950 not so much because of arguments about decreasing marginal value, but because doing so removes the possibility of disappointment. Of course, someone who feels that the “thrill of victory” is worth the possible “agony of defeat” may take the opposite choice.

Disappointment, then, is a psychological reaction to an outcome that does not match up to expectations. The greater the disparity, the greater the disappointment. We will use the word elation to describe the euphoria associated with an outcome that exceeds expectations. Decision makers who anticipate these feelings may take them into account when comparing uncertain alternatives.