Rational choice with status quo bias

Yusufcan Masatlioglu; Efe A. Ok

doi:10.1016/j.jet.2004.03.007

Rational choice with status quo bias

Yusufcan Masatlioglu, Efe A. Ok

Research output: Contribution to journal › Article › peer-review

Abstract

Motivated by the empirical findings concerning the importance of one's current situation on her choice behavior, the main objective of this paper is to propose a rational choice theory that allows for the presence of a status quo bias, and that incorporates the standard choice theory as a special case. We follow a revealed preference approach, and obtain two nested models of rational choice that allow phenomena like the status quo bias and the endowment effect, and that are applicable in any choice situation to which the standard (static) choice model applies.

Original language	English (US)
Pages (from-to)	1-29
Number of pages	29
Journal	Journal of Economic Theory
Volume	121
Issue number	1
DOIs	https://doi.org/10.1016/j.jet.2004.03.007
State	Published - Mar 2005

Keywords

Endowment effect
Expected utility
Incomplete preferences
Overpricing
Preference reversal phenomenon
Revealed preferences
Status quo bias

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.jet.2004.03.007

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keywords = "Endowment effect, Expected utility, Incomplete preferences, Overpricing, Preference reversal phenomenon, Revealed preferences, Status quo bias",

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AB - Motivated by the empirical findings concerning the importance of one's current situation on her choice behavior, the main objective of this paper is to propose a rational choice theory that allows for the presence of a status quo bias, and that incorporates the standard choice theory as a special case. We follow a revealed preference approach, and obtain two nested models of rational choice that allow phenomena like the status quo bias and the endowment effect, and that are applicable in any choice situation to which the standard (static) choice model applies.

KW - Endowment effect

KW - Expected utility

KW - Incomplete preferences

KW - Overpricing

KW - Preference reversal phenomenon

KW - Revealed preferences

KW - Status quo bias

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Rational choice with status quo bias

Abstract

Keywords

ASJC Scopus subject areas

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