By: Donald L Swanson
There is “a tendency for decision makers to choose a status quo option.” [Fn. 1]
In many decision situations there is a status quo option, which may be the result of a previous choice or may simply be the option that ensues if no action is taken.
Inertia is the tendency to stick with the status quo.
Drivers of Inertia
Two commonly cited drivers of inertia are, (i) a perception that the default option is implicitly endorsed by the default setter, and (ii) decision avoidance amid many alternatives or when alternatives are hard to understand.
The study identified in the footnote below addresses two additional drivers of inertia:
- regret aversion—a person experiences regret when a choice’s outcome proves to be worse than the outcome from the rejected choice; and
- ambiguity—a person anticipates regret when the probabilities of a good or bad outcome are unknown (i.e., when the options are ambiguous).
A laboratory experiment investigates whether regret aversion and ambiguity generate inertia.
The experiment assigns participants one of two possible tickets to play in an individual lottery. Right before the lottery is resolved, participants may choose to switch tickets. By switching, they receive a small bonus in addition to what they get from the lottery. So, participants make a private keep-or-switch decision and then play the lottery.
The experiment lotteries are designed differently in two respects:
- Some lotteries are ambiguous (participants don’t know the odds of winning), while others are clear (participants know that winning odds are 50/50); and
- Participants in some lotteries know they will learn the outcome of the rejected ticket, while participants in other lotteries know they won’t.
Here’s how the experiment is designed to work:
- By manipulating the degree of uncertainty of the lottery outcomes, the effect of ambiguity-driven indecisiveness on inertia can be assessed; and
- By manipulating participants’ knowledge about the outcome of the rejected ticket, the effect of anticipated regret on inertia can be assessed.
In the experiment, participants can switch tickets for a small bonus, right before the lottery is resolved. Then they make the keep-or-switch decision and play the lottery.
One significant statistic from the study is this: seventy-percent of participants reject the small bonus and keep the original ticket.
The experimenter concludes that inertia is “a behavioral marker of indecisiveness,” that “ambiguity-driven indecisiveness is real,” as is indecisiveness based on “anticipated regret.”
Implications for Mediation
The goal of a mediation is to overcome inertia and reach a settlement.
This study suggests that, to do so, the parties must come to believe that agreeing to a particular settlement is substantially better than taking no action. That’s because inertia causes a maintenance of the status quo to be the default choice.
Overcoming inertia is tricky. It requires high levels of skill from the mediator, excellent judgment from attorneys for the parties, and courage from the parties in overcoming regret aversion in uncertain and difficult circumstances.
A recognition of the role of inertia in decision making is a good starting point for any mediation effort.
Footnote 1: This quotation, and information in this article, are from a study: Does Uncertainty Cause Inertia in Decision Making? An Experimental Study of the Role of Regret Aversion and Indecisiveness, Journal of Economic Behavior & Organization, Volume 136, April 2017, Pages 1-14. The study is by Prof. Santiago I. Sautua, of Universidad del Rosario, Department of Economics, Bogota, Colombia.
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An excellent post and one that has implications within all areas of our lives.
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