The Roots of Cognitive Inertia: An Introduction to Institutional Changes

In this chapter, we analyze the concept of cognitive inertia, investigate the roots of its formation, and then examine the role of cognitive inertia in creating institutional changes. Cognitive inertia means the tendency to perpetuate beliefs after they are formed. The findings of this chapter show that cognitive biases play an effective role in the emergence of cognitive inertia. Among the most important identified biases that have a greater impact on the formation and escalation of cognitive inertia, this chapter identifies the following: status-quo bias, confirmation bias, commitment escalation bias, belief bias, conservatism bias, and self-attribution bias. Also, the results of this chapter show that one of the most important reasons for not forming institutional changes in a society can be attributed to the problem of cognitive inertia. Institutional economist, Douglas North argues that there is a close relationship between mental models, belief systems, and institutions. He believes that institutions are derived from belief systems. He also believes that the difference between rich and poor countries comes from the difference in their beliefs. Therefore, the lack of change in the belief system can lead to the lack of institutional changes.