Grosjean had been linked with a move to Formula E, where former F1 drivers have won all five of the drivers' titles in its short history.
However, he remains happy with his lot in F1, and explained how a chat with his son helped make up his mind.
He explained: "You're not going to win a lot of races… do I want to go on while it's David and Goliath? Would I not be better off in a smaller championship, where we may be less well off but where I can fight for victory? It's important to ask yourself these questions.
"But the answer was: I want to continue in Formula 1, I am very happy here.
"I also had a discussion with my eldest son Sacha who is six years old. He said to me, 'Dad, I have not had the opportunity to see you on a Grand Prix weekend and I want to do it next year.' It weighed in the balance a little bit."
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