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

Ashby, Nathaniel J. S.; Teodorescu, Kinneret

doi:10.1371/journal.pone.0214098

Cited by 10 publications

(8 citation statements)

References 35 publications

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“…Thus, one natural solution to help people overcome sub-optimal inertia is to directly reduce both the perceived and the experienced costs of exploring new options. For example, Ashby and Teodorescu (2019) found that reducing the monetary costs of switching between alternatives reduced inertia biases in a binary choice setting. Similarly, reducing the costs of exploration between service providers, e.g., by enforcing transparency of prices and providing easy comparison tools, reduces information costs and tends to alleviate consumer’s inertia biases (e.g., see Timmons et al, 2019 ; Byrne et al, 2020 ; Marandola et al, 2020 ).…”

Section: Introductionmentioning

confidence: 99%

On the Effect of Practice on Exploration and Exploitation of Options and Strategies

Cohen

Teodorescu

2021

Front. Psychol.

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Insufficient exploration of one’s surroundings is at the root of many real-life problems, as demonstrated by many famous biases (e.g., the status quo bias, learned helplessness). The current work focuses on the emergence of this phenomenon at the strategy level: the tendency to under-explore the set of available choice strategies. We demonstrate that insufficient exploration of strategies can also manifest as excessive exploration between options. In such cases, interventions aimed at improving choices by reducing the costs of exploration of options are likely to fail. In Study 1, participants faced an exploration task that implies an infinite number of choice strategies and a small sub-set of (near) optimal solutions. We manipulated the amount of practice participants underwent during the first, shorter game and compared their performance in a second, longer game with an identical payoff structure. Our results show that regardless of the amount of practice, participants in all experimental groups tended to under-explore the strategy space and relied on a specific strategy that implied over-exploration of the option space. That is, under-exploration of strategies was manifested as over-exploration of options. In Study 2, we added a constraint that, on a subset of practice trials, forced participants to exploit familiar options. This manipulation almost doubled the per-trial average outcome on the comparable longer second game. This suggests that forcing participants to experience the effects of different (underexplored) strategy components during practice can greatly increase the chance they make better choices later on.

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Section: Introductionmentioning

confidence: 99%

On the Effect of Practice on Exploration and Exploitation of Options and Strategies

Cohen

Teodorescu

2021

Front. Psychol.

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“…While the inaction inertia phenomenon has been replicated in multiple domains [3,4,[6][7][8][9][10][11][12][13][14][15][16][17][18] there is not a consensus on the psychological mechanism underlying the effect. Prior research suggests that inaction may be attributed to the motivation to reduce feelings of regret from missing a superior offer [3,6], or that it occurs because people devalue subsequent offers [6,11,17].…”

Section: Inaction Inertiamentioning

confidence: 99%

The reference dependence roots of inaction inertia: A query theory account

et al. 2023

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Inaction inertia is the tendency to forego an opportunity after missing a significantly better opportunity. We show that inaction inertia is rooted in reference dependence. This is consistent with prior work finding that smaller discounts are devalued and inertia is motivated by avoidance of loss. We further illuminate the process by showing that consumers treat the missed discount (rather than the regular price) as a reference point relative to which a smaller discount feels like a loss. Missing a significantly better deal causes people to focus first and foremost on thoughts critical of the current deal. Notably, consumers who miss a smaller discount also construe the second deal as a loss, even if they take it. This research integrates inaction inertia and reference dependence theory using query theory analysis to contextualize inaction inertia with biases such as loss aversion, anchoring, and the default effect.

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“…Switching costs are considered a barrier or a business strategy to maintain customer relationships (Ashby & Teodorescu, 2019). In e‐commerce, customers' usage of online systems affects their behavior of switching to other shopping channels (Chang et al, 2017).…”

Section: Research Model and Hypothesismentioning

confidence: 99%

“…Switching costs are considered a barrier or a business strategy to maintain customer relationships (Ashby & Teodorescu, 2019).…”

Section: The Influence Of E-commercementioning

confidence: 99%

Service for specialized and digitalized: Consumer switching perceptions of E‐commerce in specialty retail

Liu

Lin

2022

Manage Decis Econ

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This study explored factors influencing customers' perceptions and behaviors under the fact of low e‐commerce adoption rate in specialty retail. This research uses e‐commerce service and switching costs to determine customer behaviors in the e‐commerce of specialty retail. The results showed that e‐commerce client interface and technology have no effects on customers' acceptance of the new business relationship online, e‐commerce client interface increases customers' acceptance of setup costs, and also, e‐commerce technology increases customers' acceptance of setup costs and learning costs in specialty retail. This study found important factors affecting customers' perceptions and behaviors in the e‐commerce of specialty retail.

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

Cited by 10 publications

References 35 publications

On the Effect of Practice on Exploration and Exploitation of Options and Strategies

On the Effect of Practice on Exploration and Exploitation of Options and Strategies

The reference dependence roots of inaction inertia: A query theory account

Service for specialized and digitalized: Consumer switching perceptions of E‐commerce in specialty retail

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