Probabilistic dominance and status quo bias

• 成果类型: Article
• 署名作者: Riella, Gil; Teper, Roee
• 署名单位: Universidade de Brasilia; Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2014.04.010
• 发表日期: 2014
• 页码: 288-304
• 关键词: Probabilistic dominance; status quo bias; Comparative status quo bias; endowment effect; HOME BIAS

摘要

Decision makers have a strong tendency to retain the current state of affairs. This well-documented phenomenon is termed status quo bias. We present the probabilistic dominance approach to status quo bias: an alternative is considered acceptable to replace the status quo only if the chances of a (subjectively) severe loss, relative to the status quo, are not too high. Probabilistic dominance is applied and behaviorally characterized in a choice model that allows for a range of status quo biases, general enough to accommodate unanimity, but also standard expected utility maximization. We present a comparative notion of revealing more bias towards the status quo and study its implications to the probabilistic dominance model of choice. Lastly, the model is applied to the endowment effect phenomenon and to a problem of international portfolio choice when investors are home biased. (C) 2014 Elsevier Inc. All rights reserved.