Rational choice with status quo bias

Yusufcan Masatlioglu, Efe A. Ok

    Research output: Contribution to journalArticlepeer-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 languageEnglish (US)
    Pages (from-to)1-29
    Number of pages29
    JournalJournal of Economic Theory
    Volume121
    Issue number1
    DOIs
    StatePublished - 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

    Fingerprint Dive into the research topics of 'Rational choice with status quo bias'. Together they form a unique fingerprint.

    Cite this