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Does Uncertainty Cause Inertia In Decision Making? An Experimental Study Of The Role Of Regret Aversion And Indecisiveness

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  • Santiago I. Sautua

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.

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  • Santiago I. Sautua, 2016. "Does Uncertainty Cause Inertia In Decision Making? An Experimental Study Of The Role Of Regret Aversion And Indecisiveness," Documentos de Trabajo 14587, Universidad del Rosario.
    • Handle: RePEc:col:000092:014587
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    More about this item

    Keywords

    status quo; inertia; reference-dependent preferences; regretaversion; ambiguity; indecisiveness;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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