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The effect of switching costs on choice-inertia and its consequences

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  • Nathaniel J S Ashby
  • Kinneret Teodorescu

Abstract

In two studies we provide a novel investigation into the effects of monetary switching costs on choice-inertia (i.e., selection of the same option on consecutive choices). Study 1 employed a static decisions-from-feedback task and found that the introduction of, as well as larger, monetary switching costs led to increases in choice-inertia. While experience and decreases in the similarity of options average payouts (expected value: EV) increased choice-inertia for the option with a higher EV (the EV maximizing option), switching costs increased choice-inertia for the inferior option (the lower EV option): The proportion of total participants showing choice-inertia for the EV maximizing option also increased with switching costs. Study 2 employed a dynamic decisions-from-feedback task where halfway through the task the EV maximizing option became the inferior option. The effect of switching costs increasing choice-inertia for both the EV maximizing and the inferior option was replicated with little impact of the change in options values being detected. In sum, decision makers appear to be sensitive to switching costs, and this sensitivity can bias them towards inferior or superior options, revealing the good and the bad of choice-inertia.

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  • Nathaniel J S Ashby & Kinneret Teodorescu, 2019. "The effect of switching costs on choice-inertia and its consequences," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-18, March.
    • Handle: RePEc:plo:pone00:0214098
    DOI: 10.1371/journal.pone.0214098
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    References listed on IDEAS

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    Cited by:

    1. Heng Xu & Jingru Wang & Zhaodan Tai & Hao-Chiangkoong Lin, 2021. "Empirical Study on the Factors Affecting User Switching Behavior of Online Learning Platform Based on Push-Pull-Mooring Theory," Sustainability, MDPI, vol. 13(13), pages 1-16, June.
    2. Anne Yenching Liu & Sungmin Lin, 2023. "Service for specialized and digitalized: Consumer switching perceptions of E‐commerce in specialty retail," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1521-1533, April.

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