Explanations
Status quo bias has been attributed to a combination of loss aversion and the endowment effect, two ideas relevant to prospect theory. An individual weighs the potential losses of switching from the status quo more heavily than the potential gains; this is due to the prospect theory value function being steeper in the loss domain. As a result, the individual will prefer not to switch at all. However, the status quo bias is maintained even in the absence of gain/loss framing: for example, when subjects were asked to choose the colour of their new car, they tended towards one colour arbitrarily framed as the status quo. Loss aversion, therefore, cannot wholly explain the status quo bias, with other potential causes including regret avoidance, transaction costs and psychological commitment.
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Famous quotes containing the word explanations:
“We operate exclusively with things that do not exist, with lines, surfaces, bodies, atoms, divisible time spans, divisible spaces—how could explanations be possible at all when we initially turn everything into images, into our images!”
—Friedrich Nietzsche (1844–1900)
“Financiers are great mythomaniacs, their explanations and superstitions are those of primitive men; the world is a jungle to them. They perceive acutely that they are at the dawn of economic history.”
—Christina Stead (1902–1983)
“In the nineteenth century ... explanations of who and what women were focused primarily on reproductive events—marriage, children, the empty nest, menopause. You could explain what was happening in a woman’s life, it was believed, if you knew where she was in this reproductive cycle.”
—Grace Baruch (20th century)