Missing the best opportunity; who can seize the next one? Agents show less inaction inertia than personal decision makers

Behavioral Decision Making

et al. 2020

Self Cite

The effect of framing is well established: Decision makers' preferences are influenced by how outcomes or attributes are phrased. In the financial domain, individuals often make decisions for themselves and for others. Therefore, decisions in a two‐person context with the outcome equally allocated can be framed in two ways defined as the allocation framing: (1) self‐allocation frame: making a decision for oneself, with half the payoffs shared by another person; and (2) other‐allocation frame: making a decision for the other person and sharing half the payoffs. The results of six studies provided consistent evidence that people are more risk seeking in the self‐allocation frame than in the other‐allocation frame, and the effect was only noteworthy in the gain domain—not the loss domain. Our findings on allocation framing provide a meaningful contribution to studies of self–other decision making.

Section: Methodsmentioning

confidence: 99%

Section: Self–other Decision Differencesmentioning

confidence: 99%

Section: Self-other Decision Differencesmentioning

confidence: 99%

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Risk preferences in self–other decisions: The effect of payoff allocation framing

Yang

Behavioral Decision Making

et al. 2020

Self Cite

“…The inaction inertia principle suggests that after having missed an attractive opportunity, the likelihood of accepting a subsequent less attractive opportunity in the same domain decreases (Tykocinski et al, ). When people miss an attractive opportunity, they regard a later less attractive opportunity as a loss relative to the missed superior opportunity (Lu et al, ). As consumers wish to avoid feeling like a “sucker” when they buy a product that now costs more than it did a short time ago (i.e., anticipation regret), and they want to escape the negative emotions associated with failing to take advantage of a bargain (i.e., experienced regret; Arkes et al, ; Butler & Highhouse, ; Sevdalis, Harvey, & Yip, ; Tykocinski et al, ), they often reject the current opportunity.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…For example, inaction inertia can decrease consumer acceptance of a less attractive product or promotion, threatening practitioners’ profits. Therefore, a better understanding of why the inaction inertia is elicited and how it can be lowered has been an attractive research subject, which is evident by the many studies that have examined this phenomenon (e.g., Arkes, Kung, & Hutzel, ; Kumar, ; Liu, Cheng, & Ni, ; Lu, Jia, Xie, & Wang, ; Terris & Tykocinski, ; Tykocinski & Pittman, ; Tykocinski et al, ; Zeelenberg & Van Putten, ). However, previous studies have mostly focused on inaction inertia invoked after consumers have missed opportunities to buy single products or services.…”

Section: Introductionmentioning

confidence: 99%

The effects of promotional package frames and price strategies on inaction inertia

Psychology and Marketing

Chou

2018

Inaction inertia is the phenomenon in which people are less likely to accept a less attractive opportunity after having missed a relatively more attractive one. Previous studies have mainly explored the inaction inertia effect on single products or services, whereas this study explored how the promotional frames of sales packages influence inaction inertia toward the individual items within the sales packages and the inaction inertia effect of the target product under different price strategies. On the basis of the cost assignments of mental accounting and comparisons of the current inferior promotion with missed superior promotion, this study found evidence that when consumers encounter a freebie (bundle) condition, they assign a higher cost to the focal (supplementary) product and a lower cost to the supplementary (focal) product.Therefore, consumers who have missed a freebie (bundle) promotion exhibit lower (higher) inaction inertia toward the focal product, but higher (lower) inaction inertia toward the supplementary product. Applying a similar internal mechanism to pricing strategies, the findings also show that when consumers encounter a two-component sales package with a surcharge promotion using a partitioned price (vs. a price discount promotion using an all-inclusive price), they assign a higher cost to the base product and a lower cost to the surcharge. So, consumers who have missed the surcharge (vs. price discount) promotion show higher inaction inertia when the surcharge of the current inferior opportunity is salient, but show less inaction inertia when it is not salient. Moreover, the percent of a surcharge as a part of the total package value moderates the impact of promotional price strategy frames on inaction inertia. These findings have significant implications for both theoreticians and practitioners interested in inaction inertia, promotional frames, and price strategies.

The effect of different quantity promotion discounts on inaction inertia: The internal mechanisms of perceived closeness and mental accounting

Behavioral Decision Making

Chou

Yeh

2022

Inaction inertia is the phenomenon in which people are less likely to accept an opportunity after having previously missed a relatively superior one. Based on previous studies of inaction inertia, psychological distance, and quantity promotions, the current research explores how missing different quantity promotion discounts (multiple discount vs. single large discount vs. single small discount) influences inaction inertia and relevant mediators. The results of three experiments demonstrate a missed quantity promotion with a single small discount (e.g., "buy 3, get 25% off"), compared with a missed single large discount ("buy 5, get 40% off") or a multiple discount (e.g., "buy 3, get 25% off, or buy 5, get 40% off"), inducing higher inaction inertia through enhanced perceived closeness, upward counterfactual thinking, and perceived regret.Compared with missing a multiple-discount promotion, missing a single largediscount promotion enhances inaction inertia. However, the effect is only mediated through the number of upward counterfactual thoughts and perceived regret. These findings indicate perceived closeness, and assignments to specific mental accounts are important internal mechanisms activating inaction inertia.