The Effect of Ambiguity on Status Quo Bias: An Experimental Study∗
نویسندگان
چکیده
We conduct an experiment to determine the effect of ambiguity on status quo bias. We find no evidence of the bias in the absence of ambiguity and when ambiguity is present both in the status quo option and the alternative. We do find evidence for status quo bias under asymmetric presence of ambiguity, i.e. when the status quo option is non-ambiguous and the alternative is, or when the status quo option is ambiguous and the alternative is not. These findings are not predicted by the existing models of choice with initial endowment, such as the loss aversion model by Kahneman and Tversky (1979) and the incomplete preferences model by Bewley (1986). Our results, combined with the evidence from the endowment effect literature, suggest that dissimilarity between options may be an important determinant of the status quo bias.
منابع مشابه
Status Quo Bias under Uncertainty: An Experimental Study∗
Individuals’ tendency to stick to the current state of affairs, known as the status quo bias, has been widely documented over the past 30 years. Yet, the determinants of this phenomenon remain elusive. Following the intuition suggested by Bewley (1986), we conduct a systematic experiment exploring the role played by different types of uncertainty on the emergence of the bias. We find no bias wh...
متن کاملStatus Quo or Decoy; An Experiment∗
The classical choice theory assumes that an individual’s choice does not depend on irrelevant alternatives or the way that alternatives are labeled; such as an endowment or a default. However, phenomena such as the “Status Quo Bias” and “Attraction Effect” which apparently imply violation of rationality, have been widely observed. Even though they exhibit similar pattern of choices, the relatio...
متن کاملBehavior in a Simplified Stock Market: The Status Quo Bias, the Disposition Effect and the Ostrich Effect
Specific behavioral tendencies cause investors to deviate from optimal investing. We investigate three such tendencies in a simplified stock market. Subjects rarely follow the fully profit-maximizing strategy, most commonly by ignoring information and continuing to hold on to a stock regardless of its performance. The results support the predictions of the status quo bias, but not the ostrich e...
متن کاملPsychology of Successful Investing
The problem of how to maximize growth of wealth was solved over half a century ago by Kelly and Breiman: maximize the expected value of the logarithm of wealth after each period. However, as living organisms we have evolved to maximize gene replication, not wealth. Natural selection is a slow process, so our minds today are adapted to seeking our ultimate goal of reproduction in the environment...
متن کامل