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

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.