Status quo bias, multiple priors and uncertainty aversion

Pietro Ortoleva

Games and Economic Behavior, 2010, vol. 69, issue 2, 411-424

Abstract: Motivated by the extensive evidence about the relevance of status quo bias both in experiments and in real markets, we study this phenomenon from a decision-theoretic prospective, focusing on the case of preferences under uncertainty. We develop an axiomatic framework that takes as a primitive the preferences of an agent for each possible status quo option, and provide a characterization according to which the agent considers a full-dimensional set of possible priors and abandons her status quo option only if she finds an alternative that returns a higher expected utility for each of these priors. We then show that, in this framework, the very presence of a status quo induces the agent to be more uncertainty averse than she would be without a status quo option.

Keywords: Status; quo; bias; Ambiguity; aversion; Endowment; effect (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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Working Paper: Status Quo Bias, Multiple Priors and Uncertainty Aversion (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:69:y:2010:i:2:p:411-424

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