Deciding to sell: The effect of prior inaction and offer source

Abstract

Recent research has shown that decision makers are less likely to accept an opportunity after failing to act on a previous offer, an effect labeled inaction inertia. We extended the original research by examining the phenomenon in the domain of losses as well as in the domain of gains. A pattern consistent with the inaction inertia effect was found for gains but not for losses. We also manipulated the source of the second offer and found that evaluations of gains decreased after inaction regardless of source, but evaluations of losses increased when the second offer came from a different source. Evaluations of the offer were highly correlated with ratings of anticipated regret, suggesting that the avoidance of negative emotions may be partially responsible for the effect.