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Status quo bias is a cognitive bias; an irrational preference for the current state of affairs.

Status quo bias shows a connection with other irrational biases such as loss aversion, existence bias, endowment effect, longevity, mere exposure, and regret avoidance. There is a commonly used experiment for testing whether or not Status quo bias is present called the Reversal test.

Explanations

Status quo bias can happen where there are risk involved such as when making monetary decisions or when there is no risk is such as when people were asked to choose the color of their new car, they tended towards one color arbitrarily presented to them first. Many factors may be present such as regret avoidance,transaction costs and psychological commitment. The percieved status quo often has to do with the Framing of a question. Kahneman, Thaler, and Knetsch created experiments that could produce this effect reliably. Samuelson and Zeckhauser (1988) demonstrated status quo bias using a questionnaire in which subjects faced a series of decision problems, which were alternately framed to be with and without a pre-existing status quo position. Subjects tended to remain with the status quo when such a position was offered to them.

Prospect Theory

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. As a result, the individual will prefer not to switch at all.

Loss aversion

Loss aversion can also lead to greater regret for action than for inaction; more regret is experienced when a decision changes the status quo than when it maintains it. Together these forces provide an advantage for the status quo; people are motivated to do nothing or to maintain current or previous decisions. Change is avoided, and decision makers stick with what has been done in the past.

Changes from the status quo will typically involve both gains and losses, with the change having good overall consequences if the gains outweigh these losses. A tendency to overemphasize the avoidance of losses will thus favor retaining the status quo, resulting in a status quo bias. Even though choosing the status quo may entail forfeiting certain positive consequences, when these are represented as forfeited "gains" they are psychologically given less weight than the "losses" that would be incurred if the status quo were changed.

Endowment effect

The Endowment effect is a sense that simply because someone has taken ownership of something, it now has more value than when it was previously unclaimed. In a sense of a free market, where sellers are allowed to determine the prices of their own items, this dramatically impacts the perceived resell value. It causes the seller to place a much higher value than any buyer would be willing to agree on which can result in stalemate causing where both parties decide to stay with their current options. However ownership does not have to be associated with just physical products and the Endowment effect can be attributed to points of view as well.

Other Irrational Biases Linked to Status Quo Bias

The irrational maintenance of the status quo bias links and confounds many cognitive biases.

Existence bias

An assumption of longevity and goodness are part of the status quo bias. People treat existence as a prima facie case for goodness, aesthetic and Longevity increases this preference. The status quo bias affects people’s preferences; people report preferences for what they are likely rather than unlikely to receive. People simply assume, with little reason or deliberation, the goodness of existing states.

Longevity is a corollary of the existence bias: if existence is good, longer existence should be better. This thinking resembles quasi-evolutionary notions of ‘‘survival of the fittest,’’ and also the augmentation principle in attribution theory.

Inertia is another reason used to explain a bias towards the status quo. Another explanation is fear of regret in making a wrong decision, i.e. If we choose a partner, when we think there could be someone better out there.

Mere exposure

Mere exposure is when existing choices are more preferred merely because they are more familiar.

Omission bias

Omission bias may account for some of the findings previously ascribed to status quo bias. Omission bias is diagnosed when a decision maker prefers a harmful outcome that results from an omission to a less harmful outcome that results from an action.

Rational Explanations for Status Quo Maintenance

A status quo bias can also be a rational choice if there are cognitive or informational limitations.

Informational limitations

Decision outcomes are rarely certain and because some errors are more costly than others (Haselton & Nettle, 2006), sticking with what worked in the past is a safe option, as long as previous decisions are ‘‘good enough’'.

Cognitive limitations

Having to make a decision at all is often difficult, and decision makers may prefer to do nothing and ⁄ or to maintain their current course of action because it is easier because the Status quo often require less mental effort to maintain.

Factors that Impact Status Quo Bias

Status Quo Bias primarily has too with the framing of various factors of a decision that is to be made. In order to have a status quo, there must be a perceived neutral reference point. Varitions to this reference point can effect whether an outcome to the decision is viewed as a loss or a gain. Accountability of the decision maker is a factor that has been shown to increase the likelihood that people will stay with the status quo. A study presented participants with the powers of the Food and Drug Administration to allow a new drug onto the market. When faced with letting a new drug onto the market, those participants that would face being made accountable by either gaining or losing the approval of a political demographic were a lot less likely to allow the drug to be released than participants were unaccountable.

Institutional Norms

In order to progress within an established organizational structure individuals must often conform to normalized behavior. This often involves leaving decisions about even the slightest changes to organizational methods to senior members. Decision makers at these senior levels consider problems that arise as a change to status quo as being judged more critically than failures that result from a current flawed system being left in place. In the case of organizations that control the U.S. water supply, success is often measured by the lack of complaints being made. This means that any innovation will be dismissed if it is even slightly likely to cause a temporary decline in current productivity. The result is that any changes or improvements have to made on top of current methods.

In the context of academic institutions of higher learning, faculty members often feel they have very little control over what happens at their institution unless it is within their own department. Through the Endowment effect, senior faculty members place value on their current practiced teaching and research methods because it is their own product. This combination results in a hostility towards new ideas proposed by deans at a higher level or assistant professors that seek to pursue new practices. This could be combated by instead presenting faculty members with a mass of information that points towards a certain conclusion but does not explicitly state it. This allows the faculty members to take ownership of the idea and use the Endowment effect to a positive advantage.

Number of Choices

The more options there are to choose from, the more likely a person is to stick to the status quo even when it is obviously producing worse results than other options. The more choices there are available, the more likely a person is to stay with the status quo. For instance Status quo bias is three times as strong with 100 alternatives than it is with 25.

Uncertainty of Individual Benefactors

The question of why political institutions do not choose to enact certain policies can stem from something other than the typical irrational concepts such as Risk aversion. Policies that are very likely to be viewed as positive political changes after they are passed can be hindered because those that will be credited for their success are uncertain. However, a political move to stay with the current status quo has more predictable results of who it's success or failure will be attributed to.

Detection

Reversal Test

The Reversal Test is when if asked if an increase in a trait is not preferred over the current status quo, whether a decrease in that trait would be more preferable. The rationale of the Reversal Test is if a continuous parameter admits of a wide range of possible values, only a tiny subset of which can be local optima, then it is prima facie implausible that the actual value of that parameter should just happen to be at one of these rare local optima.

Neural Activity

A study found that erroneous status quo rejections have a greater neural impact than erroneous status quo acceptances. This asymmetry in the genesis of regret might drive the status quo bias on subsequent decisions.

A study was done using a visual detection task in which subjects tended to favor the default when making difficult, but not easy, decisions. This bias was suboptimal in that more errors were made when the default was accepted. A selective increase in subthalamic nucleus (STN) activity was found when the status quo was rejected in the face of heightened decision difficulty. Analysis of effective connectivity showed that inferior frontal cortex, a region more active for difficult decisions, exerted an enhanced modulatory influence on the STN during switches away from the status quo.

Research by University College London scientists that examines the neural pathways involved in 'status quo bias' in the human brain and found that the more difficult the decision we face, the more likely we are not to act. The study, published in Proceedings of the National Academy of Sciences (PNAS), looked at the decision-making of participants taking part in a tennis 'line judgement' game while their brains were scanned using functional MRI (fMRI). The 16 study participants were asked to look at a cross between two tramlines on a screen while holding down a 'default' key. They then saw a ball land in the court and had to make a decision as to whether it was in or out. On each trial, the computer signalled which was the current default option - 'in' or 'out'. The participants continued to hold down the key to accept the default and had to release it and change to another key to reject the default. The results showed a consistent bias towards the default, which led to errors. As the task became more difficult, the bias became even more pronounced. The fMRI scans showed that a region of the brain known as the subthalamic nucleus (STN) was more active in the cases when the default was rejected. Also, greater flow of information was seen from a separate region sensitive to difficulty (the prefrontal cortex) to the STN. This indicates that the STN plays a key role in overcoming status quo bias when the decision is difficult.

Impacts on Real World Decisions

401K Plans

[[Font Colo|red|Two behavioral economists used their understanding of the status quo bias to devise an opt-out plan to help employees of a particular company build their retirement savings. In the opt-out plan, the employees were automatically enrolled unless they explicitly asked to be excluded. In the opt-in plan, the employees would have had to give their consent to be enrolled in the exact same savings plan. Though the benefits of the plan were exactly the same, the opt-out plan had a much higher rate of participation than the opt-in plan.}}

Automotive Insurance

The US states of New Jersey and Pennsylvania inadvertently ran a real-life experiment providing evidence of status quo bias in the early 1990s. As part of tort law reform programs, citizens were offered two options for their automotive insurance: an expensive option giving them full right to sue and a less expensive option with restricted rights to sue. In New Jersey the cheaper option was the default and most citizens selected it. Only a minority chose the cheaper option in Pennsylvania, where the more expensive option was the default. Similar effects have been shown for contributions to retirement plans, choice of internet privacy policies and the decision to become an organ donor.

Ethics

Status quo bias may be responsible for much of the opposition to human enhancement in general and to genetic cognitive enhancement in particular.

Education

Education can (sometimes unintentionally) encourage children’s belief in the substantive merits of a particular existing law or political institution, where the effect does not derive from an improvement in their ability or critical thinking about that law or institution. However, this biasing effect is not automatically illegitimate or counterproductive: a balance between social inculcation and openness needs to be maintained.

Reading in schools within the elementary classroom, reading aloud sessions that exclude ethnically diverse materials create a bias in favor of the status quo that is harmful to children's education.

Electric Power Plans

California electric power consumers were asked about their preferences regarding trade-offs between service reliability and rates. The respondents fell into two groups, one with much more reliable service than the other. Each group was asked to state a preference among six combinations of reliability and rates, with one of the combinations designated as the status quo. A strong bias to the status quo was observed. Of those in the high-reliability group, 60.2 percent chose the status quo, whereas a mere 5.7 percent chose the low-reliability option that the other group had been experiencing, despite its lower rates. Similarly, of those in the low reliability group, 58.3 chose their low-reliability status quo, and only 5.8 chose the high-reliability option.

Health

An experiment to determine if status-quo bias—bias toward current medication even when better alternatives are offered—exists in a stated-choice study among asthma patients who take prescription combination maintenance medications. The results of this study indicate that the status quo bias may exist in stated-choice studies, especially with medications that patients have to take daily such as asthma maintenance medications. Stated-choice practitioners should include a current medication in choice surveys to control for this bias.

Mutual Funds

When given the choice of selecting from different options mutual and hedge fund investors were shown to have a preference for previous selections for no other rational reason than they had chosen it before. The preference for the status quo was strong when there were more alternatives to choose from.

Politics

Preference for the status quo represents a core component of conservative ideology because preference for the status quo is one significant element of conservative ideology, the bias in its favor plays a role – under certain conditions – in promoting political conservatism.

See also

• Endowment effect
• List of cognitive biases
• Norm (social)
• Omission Bias
• Situationism (psychology)
• System justification

Further reading

• Barry, W. J. (2012). "Challenging the Status Quo Meaning of Educational Quality: Introducing Transformational Quality (TQ) Theory©". Educational Journal of Living Theories. 4: 1–29.
• Johnson, E. J.; Hershey, J.; Meszaros, J.; Kunreuther, H. (1993). "Framing, Probability Distortions, and Insurance Decisions". Journal of Risk and Uncertainty. 7: 35–51. doi:10.1007/BF01065313.

• Seiler, Michael J.; Vicky, Traub; Harrison (2008). "Familiarity Bias and the Status Quo Alternative". Journal of Housing Research. 17 (2): 139–154. doi:10.1080/10835547.2008.12091988.
• Mandler, Michael. (June, 2004). Welfare economics with status quo bias: a policy paralysis problem and cure. Royal Holloway College, University of London.
• Wittman, Donald (2007). "Is Status Quo Bias Consistent With Downward-Sloping Demand?". Economic Inquiry. 46: 243–288.
• Kim, H.W. and A. Kankanhalli. (2008). Investigating User Resistance to Information Systems Implementation: A Status Quo Bias Perspective. "MIS Quarterly".

Category:Behavioral finance Category:Cognitive biases Category:Conformity Category:Prospect theory