Advertisement

Journal of Risk and Uncertainty

, Volume 1, Issue 1, pp 7–59 | Cite as

Status quo bias in decision making

  • William Samuelson
  • Richard Zeckhauser
Article

Abstract

Most real decisions, unlike those of economics texts, have a status quo alternative—that is, doing nothing or maintaining one's current or previous decision. A series of decision-making experiments shows that individuals disproportionately stick with the status quo. Data on the selections of health plans and retirement programs by faculty members reveal that the status quo bias is substantial in important real decisions. Economics, psychology, and decision theory provide possible explanations for this bias. Applications are discussed ranging from marketing techniques, to industrial organization, to the advance of science.

Key words

decision making experimental economics status quo bias choice model behavioral economics rationality 
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Akerlof, G. A., and Dickens, W. T. “The Economic Consequences of Cognitive Dissonance”,American Economic Review 72 (1982), 307–319.Google Scholar
  2. Bell, D. E. “Regret in Decision Making Under Uncertainty”,Operations Research 30 (1982), 961–981.Google Scholar
  3. Bem, D. J. “Self-Perception Theory”. In: L. Berkowitz, ed.,Advances in Experimental Social Psychology, Vol. 6, Academic Press, 1972.Google Scholar
  4. Ben-Horin, D. “Dying to Work: Occupational Cynicism Plagues Chemical Workers”,In These Times 3 (June 27/July 3, 1979), 24.Google Scholar
  5. Brehm, J. “Postdecision Changes in the Desirability of Alternatives”,Journal of Abnormal Social Psychology 52 (1956), 384–389.Google Scholar
  6. Brockner, J., and Rubin J. Z.Entrapment in Escalating Conflict. Springer-Verlag, 1982.Google Scholar
  7. David, P. “Clio and the Economics of QWERTY”,American Economic Review 75 (1985), 332–337.Google Scholar
  8. Degroot, M.Optimal Statistical Decisions. New York: McGraw-Hill, 1970.Google Scholar
  9. Doane, M. J., Hartman, R. S., and Woo, C. “Household Preference for Interruptible Rate Options and the Revealed Value of Service Reliability”, mimeo, Boston University, 1987.Google Scholar
  10. Festinger, L., and Carlsmith, J. M. “Cognitive Consequences of Forced Compliance”,Journal of Abnormal and Social Psychology 58 (1959), 203–210.Google Scholar
  11. Gilbert, J. P., Light, R. J., and Mosteller, F. “Assessing Social Innovations: An Empirical Base for Policy”. In: W. Fairley and F. Mosteller, eds.,Statistics and Public Policy, Reading, Massachusetts: Addison-Wesley, 1977.Google Scholar
  12. Jeuland, A. P. “Brand Choice Inertia as One Aspect of the Notion of Brand Loyalty”,Management Science 25 (1979), 671–82.Google Scholar
  13. Kahneman, D., Knetsch, J. L., and Thaler, R. “Fairness as a Constraint on Profit Seeking: Entitlements in the Market”,American Economic Review 76 (1986), 728–741.Google Scholar
  14. Kahneman, D., Slovic, P., and Tversky, A.Judgment Under Uncertainty: Heuristics and Biases, Cambridge, England: Cambridge University Press, 1982.Google Scholar
  15. Kahneman, D., and Tversky, A. “Prospect Theory: An Analysis of Decision under Risk”,Econometrica 47 (1979), 263–281.Google Scholar
  16. Kahneman, D., and Tversky, A. “The Psychology of Preference”,Scientific American 246 (1982), 160–173.Google Scholar
  17. Kahneman, D., and Tversky, A. “Choices, Values and Frames”,American Psychologist 39 (1984), 341–350.Google Scholar
  18. Knetsch, J., Thaler, R., and Kahneman, D. “Reluctance to Trade: An Experimental Refutation of the Coase Theorem”, mimeo, 1987.Google Scholar
  19. Knox, R. E., and Inkster, J. A., “Post Decision Dissonance at Post Time”,Journal of Personality and Social Psychology 8 (1968), 319–323.Google Scholar
  20. Kuhn, T. P.The Structure of Scientific Revolutions. Chicago: Chicago University Press, 1962.Google Scholar
  21. Langer, E.The Psychology of Control. Beverley Hills, CA: Sage Publications, 1983.Google Scholar
  22. Loewenstein, G. “Expectations and Intertemporal Choice”, Economics dissertation, Yale University, 1985.Google Scholar
  23. Louis, A. M. “Schlitz's Crafty Taste Test”,Fortune (June 26, 1981), 32–34.Google Scholar
  24. Mulanaphy, J. “Participants' Allocation Change and CREF Transfer Practices”, Teachers Insurance and Annuity Association, 1986.Google Scholar
  25. Neipp, J., and Zeckhauser, R. “Persistence in the Choice of Health Plans”. In R. Scheffler and L. Rossiter, eds.,Biased Selection in Health Care Markets. Greenwich, CT: JAI Press, 1985.Google Scholar
  26. Nelson, R., and Winter, S.An Evolutionary Theory of Economic Change, Cambridge, Massachusetts: Harvard University Press, 1982.Google Scholar
  27. O'Hare, M., Bacow, L., and Sanderson, D.Facility Siting and Public Opposition, New York: Van Nostrand Reinhold, 1983.Google Scholar
  28. Pratt, J., Wise, D., and Zeckhauser, R. “Price Differences in Almost Competitive Markets”,Quarterly Journal of Economics 53 (1979), 189–211.Google Scholar
  29. Quattrone, G. A., and Tversky, A. “Contrasting Rational and Psychological Analyses of Political Choice”, mimeo, Stanford University, 1987.Google Scholar
  30. Rowe, R. D., d'Arge, R. C., and Brookshire, D. S. “An Experiment on the Economic Value of Visibility”,Journal of Environmental Economics and Management 7 (1980), 1–19.Google Scholar
  31. Savage, L. J.The Foundations of Statistics, New York: Wiley, 1954.Google Scholar
  32. “Saying No to New Coke”,Newsweek (June 24, 1985), 32–33.Google Scholar
  33. Schelling, T. C.The Strategy of Conflict. Cambridge, MA: Harvard University Press, 1960.Google Scholar
  34. Schmalensee, R. “Product Differentiation Advantages of Pioneering Brands”,American Economic Review 72 (1982), 349–365.Google Scholar
  35. Schoenberger, W.Decision Destiny, Athens, Ohio: Ohio University Press, 1979.Google Scholar
  36. Schotter, A., and Braunstein, Y. “Economic Search: An Experimental Study”,Economic Inquiry 19 (1981), 1–25.Google Scholar
  37. Simon, H.Models of Man. New York: Wiley, 1957.Google Scholar
  38. Stimson, H. S. “The Decision to Use the Atomic Bomb”,Harper's 197 (1947), 97–107.Google Scholar
  39. Thaler, R. “Toward a Positive Theory of Consumer Choice”,Journal of Economic Behavior and Organization 1 (1980), 39–60.Google Scholar
  40. Tversky, A., and Kahneman, D. “Judgment under Uncertainty: Heuristics and Biases”,Science 185 (1974), 1124–1131.Google Scholar
  41. Urban, G., Carter, T., Gaskin, S., and Mucha, Z. “Market Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Implications”,Management Science 32 (1986), 645–659.Google Scholar

Copyright information

© Kluwer Academic Publishers 1988

Authors and Affiliations

  • William Samuelson
    • 1
  • Richard Zeckhauser
    • 2
  1. 1.Boston UniversityBoston
  2. 2.Harvard UniversityHarvard

Personalised recommendations