Download pdf
Applications of the Status Quo Bias in Consumer Rationality, Predictive Analytics, and Medicine
- 1 University of California
* Author to whom correspondence should be addressed.
Abstract
The status quo bias is a heuristic that indicates people are more likely to stick with the default option and not willing to make changes even if making the change is more beneficial when they are making choices, and the status quo bias gets more robust when there are more options, or the new choices appear to be more intricate. This heuristic dramatically influences people's behavior while making choices, so it’s essential to know how it modifies people's choice-making strategy in different markets to eliminate possible errors and make more precise predictions. Based on previous research and studies, this article explains the basic concept of status quo bias and discusses three applications of status quo bias in three different fields. The first application discusses the connection between consumer rationality and the status quo, which indicates that knowing the effect of the status quo helps companies to know better the consumers' willingness to switch to alternative options. The second application indicates that the status quo bias makes people underestimate the interest rate change in bond markets. Finally, the third application shows that the status quo bias helps the governments to enact better policies to encourage more organ donors.
Keywords
consumer rationality, predictive analytics, medicine, status quo bias
[1]. Samuelson, W., & Zeckhauser, R.: Status quo bias in decision making. Journal of risk and uncertainty, 1(1), 7-59(1988).
[2]. Kahneman, T. D. Kahneman, A. Tversky.: Prospect theory: An analysis of decisions under risk, 263-291 (1979).
[3]. Kahneman, D., & Tversky, A.: The psychology of preferences. Scientific American, 246(1), 160-173 (1982).
[4]. Landman, J.: Regret and elation following action and inaction: Affective responses to positive versus negative outcomes. Personality and Social Psychology Bulletin, 13(4), 524-536(1987).
[5]. Hartman, R. S., Doane, M. J., & Woo, C. K.: Consumer rationality and the status quo. The Quarterly Journal of Economics, 106(1), 141-162(1991).
[6]. Patel, J., Zeckhauser, R., & Hendricks, D.: The rationality struggle: Illustrations from financial markets. The American Economic Review, 81(2), 232-236(1991).
[7]. Gubaydullina, Z., Hein, O., & Spiwoks, M.: The status quo bias of bond market analysts. Journal of Applied Finance & Banking, 1(1), 31-51(2011).
[8]. Johnson, E. J., & Goldstein, D.: Do defaults save lives? Science, 302(5649), 1338-1339 (2003).
[9]. Korobkin, R.: Status quo bias and contract default rules. Cornell L. Rev., 83, 608 (1997).
[10]. Rowe, R. D., d'Arge, R. C., & Brookshire, D. S.: An experiment on the economic value of visibility. Journal of Environmental Economics and Management, 7(1), 1-19 (1980).
Cite this article
Qi,J. (2023). Applications of the Status Quo Bias in Consumer Rationality, Predictive Analytics, and Medicine. Advances in Economics, Management and Political Sciences,12,269-273.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
Disclaimer/Publisher's Note
The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.
About volume
Volume title: Proceedings of the 2nd International Conference on Business and Policy Studies
© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and
conditions of the Creative Commons Attribution (CC BY) license. Authors who
publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons
Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this
series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published
version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial
publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and
during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See
Open access policy for details).