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

Santiago I. Sautua (santiago.sautua@urosario.edu.co)

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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