DOES UNCERTAINTY CAUSE INERTIA IN DECISION MAKING? AN EXPERIMENTAL STUDY OF THE ROLE OF REGRET AVERSION AND INDECISIVENESS

Santiago I. Sautua ()

No 14587, Documentos de Trabajo from Universidad del Rosario

Abstract: Previous research has shown that often there is clear inertia in individual decision making that is, a tendency for decision makers to choose a status quo option. I conduct a laboratory experiment to investigate two potential determinants of inertia in uncertain environments: (i) regret aversion and (ii) ambiguity-driven indecisiveness. I use a between-subjects design with varying conditions to identify the e¤ects of these two mechanisms on choice behavior. In each condition, participants choose between two simple real gambles, one of which is the status quo option. I nd that inertia is quite large and that both mechanisms are equally important.

Keywords: status quo; inertia; reference-dependent preferences; regretaversion; ambiguity; indecisiveness (search for similar items in EconPapers)
JEL-codes: C91 D01 D03 D81 (search for similar items in EconPapers)
Pages: 48
Date: 2016-03-07
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:col:000092:014587

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