  Inertia and context-dependent choice effects are well-studied classes of
behavioural phenomena. While much is known about these effects in isolation,
little is known about whether one of them "dominates" the other when both can
potentially be present. Knowledge of any such dominance is relevant for
effective choice architecture and descriptive modelling. We initiate this
empirical investigation with a between-subjects lab experiment in which each
subject made a single decision over two or three money lotteries. Our
experiment was designed to test for dominance between *status quo bias* and the
*decoy effect*. We find strong evidence for status quo bias and no evidence for
the decoy effect. We also find that status quo bias can be powerful enough so
that, at the aggregate level, a fraction of subjects switch from being
risk-averse to being risk-seeking. Survey evidence suggests that this is due to
subjects focusing on the maximum possible amount when the risky lottery is the
default and on the highest probability of winning the biggest possible reward
when there is no default. The observed reversal in risk attitudes is
explainable by a large class of Koszegi-Rabin (2006) reference-dependent
preferences.
