Status Quo Bias under Uncertainty: An Experimental Study

Amnon Maltz and Giorgia Romagnoli

No WP2017/6, Working Papers from University of Haifa, Department of Economics

Abstract: Individuals' tendency to stick to the current state of a airs, 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 di erent types of uncertainty on the emergence of the bias. We nd no bias when the status quo option and the alternative are both risky (gambles with known probabilities) or both ambiguous (gambles with unknown probabilities). The bias emerges under asymmetric presence of ambiguity, i.e., when the status quo option is risky and the alternative ambiguous, or vice versa. These ndings are not predicted by existing models based on loss aversion (Kahneman and Tversky, 1979) or incomplete preferences (Bewley, 1986) and suggest a novel determinant of the status quo bias: the dissimilarity between the status quo option and the alternative

Keywords: Status Quo Bias; Risk; Ambiguity; Reference E ects; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D11 D81 (search for similar items in EconPapers)
Pages: 39
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Citations: View citations in EconPapers (1)

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