Peterson controversially took home the $250,000 prize after choosing to "keep" the money, leaving his partner Rachel Truehart with nothing.
Harrison has now written in his blog for Entertainment Weekly that he felt bad for Truehart, who is recovering from the break-up of her relationship with fellow Bachelor Pad contestant Michael Stagliano.
He also suggested that Peterson "didn't handle the situation well after he won the money" but pointed out that Bachelor Pad is "a game".
"Nobody, especially nobody in Rachel's alliance, gave a damn about Nick," Harrison said. "Not only did they not care about him, but they didn't think he had a chance to make it to the finals. Nick was expendable and he was being used.
"Even while he was sitting on the stage, nobody in Rachel's alliance felt he deserved the money or even to be up there. The only problem with that thought is whether you think somebody 'deserves' it or not, he was there."
Harrison continued: "The question Nick faced was should he split the money with a woman he never had an alliance with, who didn't really respect him as far as the game goes, and didn't think he 'deserved' to be there... or should he keep the entire amount for himself."
The host admitted that he thought he'd seen "just about everything" during his time hosting the Bachelor franchise but acknowledged that he was "wrong".
"I was stunned Nick had the guts to actually pull the trigger and keep all the money for himself," he said. "The audience loved the move and went nuts when he revealed his decision. The look on the other cast members' faces was priceless."
Actress Lindsay Lohan has criticised Peterson for the move on her Twitter page, saying: "His karma will come with his greed."