scholarly journals Exogenous Endowment—Endogenous Reference Point

2019 ◽  
Vol 130 (625) ◽  
pp. 160-182 ◽  
Author(s):  
Amnon Maltz
Keyword(s):  
Risk Premium ◽  
Reference Point ◽  
Status Quo ◽  
Status Quo Bias ◽  
Final Choice ◽  
The Status ◽  
Feasible Alternative ◽  
Endogenous Reference ◽  
Experimental Findings ◽  
Category Bias

Abstract We develop a model in the presence of categories that creates a link between the agent’s exogenous endowment and an endogenous reference point. The reference point is the best feasible alternative in the endowment’s category. This reference generates a constraint set from which the final choice is made according to utility maximisation. The model predicts category bias, which generalises the status quo bias by attracting the agent to her endowment’s category but not necessarily to the endowment itself. We show that it accommodates recent experimental findings regarding the presence and absence of status quo bias in the realm of uncertainty. In a stylised financial setup, we show that it may lead to a risk premium even with risk-neutral agents.

Prospect Theory, Loss Aversion, and Political Behavior

2020 ◽  
Author(s):  
Francesco Passarelli ◽  
Alessandro Del Ponte
Keyword(s):  
Prospect Theory ◽  
Expected Utility ◽  
Loss Aversion ◽  
Reference Point ◽  
Status Quo ◽  
Status Quo Bias ◽  
Reflection Effect ◽  
Voting Rules ◽  
Current State ◽  
The Status

Prospect theory introduces several anomalies in the behavior of rational agents, including loss aversion, the reflection effect, probability weighting, and the certainty effect. Loss aversion occurs relative to the current state of the world, called reference point. Being loss averse causes people to prefer the current state of affairs above and beyond the expected utility that comes from a risky political change, engendering a status quo bias. Yet, bias is asymmetric due to the reflection effect: people are too tepid toward advantageous platforms or candidates, whereas they are not critical enough of detrimental policies or bad politicians. Both rich and poor citizens take similar stances on nonpartisan issues (such as national defense): this happens because they evaluate uncertain policy changes relative to a reference point. Citizens welcome radical political platforms with greater enthusiasm than incremental proposals. Generally, under prospect theory societal conflict is smoother than under expected utility theory. Older societies are more prone to preserving the status quo than younger ones. These properties also affect the choice of voting rules. Loss aversion induces people to prefer more prudent voting rules and preserve the status quo. Hence, agents favor higher majority thresholds or even unanimity over simple majority in constitutional choice. The status quo bias supports the persistence of policy cycles, with prolonged drifts in one direction before a trend reversal. In sum, loss aversion and other anomalies pinpointed by prospect theory offer insightful predictions with which to study political phenomena.

scholarly journals Reconciling Loss Aversion and Gain Seeking in Judged Emotions

2021 ◽  
pp. 096372142199204
Author(s):  
Barbara A. Mellers ◽  
Siyuan Yin ◽  
Jonathan Z. Berman
Keyword(s):  
Loss Aversion ◽  
Reference Point ◽  
Emotional Reactions ◽  
Status Quo ◽  
New Approach ◽  
Negative Change ◽  
Starting Point ◽  
The Status ◽  
Positive Feelings ◽  
Negative Feelings

Is the pain of a loss greater in magnitude than the pleasure of a comparable gain? Studies that compare positive feelings about a gain with negative feelings about a comparable loss have found mixed answers to this question. The pain of a loss can be greater than, less than, or equal to the pleasure of a comparable gain. We offer a new approach to test hedonic loss aversion. This method uses emotional reactions to the reference point, a positive change, and a negative change. When we manipulated the reference point (i.e., pleasurable and painful), two distinct patterns emerged. Pain surpassed pleasure (loss aversion) when the reference point was positive, and pleasure exceeded pain (gain seeking) when the reference point was negative. A reference-dependent version of prospect theory accounts for the results. If the carriers of utility are changes from a reference point—not necessarily the status quo—both loss aversion and gain seeking are predicted. Loss aversion and gain seeking can be reconciled if you take the starting point into account.

Numerical Information Format and Investment Decisions: Implications for the Disposition Effect and the Status Quo Bias

2005 ◽  
Vol 6 (1) ◽  
pp. 19-26 ◽  
Author(s):  
Enrico Rubaltelli ◽  
Sandro Rubichi ◽  
Lucia Savadori ◽  
Marcello Tedeschi ◽  
Riccardo Ferretti
Keyword(s):  
Investment Decisions ◽  
Status Quo ◽  
Disposition Effect ◽  
Status Quo Bias ◽  
Numerical Information ◽  
The Status ◽  
Information Format

scholarly journals The status quo bias and the uptake of open access

First Monday ◽  
2019 ◽  
Author(s):  
Melissa H. Cantrell ◽  
Lauren B. Collister
Keyword(s):  
Open Access ◽  
Qualitative Methods ◽  
Cognitive Load ◽  
Reliable Method ◽  
Status Quo ◽  
Open Access Publishing ◽  
Status Quo Bias ◽  
The Status ◽  
Quantitative And Qualitative Methods

In this paper we argue that the framing of open access through language adopted by a variety of stakeholders serves to inhibit the uptake of open access publishing through the mechanisms of complexity and cognitive load. Using both quantitative and qualitative methods, we analyze both the language and tiers of decisions that confront authors seeking information online about open access. We conclude that this information is for the most part prohibitively complex and introduces contradictory interpretations and executions of open access that act to motivate a phenomenon known as the status quo bias. The only reliable method of counteracting this status quo bias in order to bolster the uptake of open access is to re-frame the language that is commonly employed in association with open access and to minimize the tiers of decisions expected of authors, which create a barrier rather than a gateway to open access engagement.

scholarly journals Switching from cash to mobile payment: what's the hold-up?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xiu-Ming Loh ◽  
Voon-Hsien Lee ◽  
Garry Wei-Han Tan ◽  
Keng-Boon Ooi ◽  
Yogesh K. Dwivedi
Keyword(s):  
Conceptual Model ◽  
Design Methodology ◽  
Status Quo ◽  
Security And Privacy ◽  
Mobile Payment ◽  
Status Quo Bias ◽  
Content Type ◽  
Perceived Security ◽  
The Status ◽  
Push Factor

PurposeThis paper explores the reasons behind the slow uptake of mobile payment (m-payment) from a switching intention (SI) perspective. The antecedents of SI from cash to m-payment were explored using an integrated conceptual model of the push-pull-mooring (PPM) framework and the status quo bias (SQB) perspective.Design/methodology/approachA self-administered survey was used to collect data, which are empirically tested using SmartPLS 3.0.FindingsThe push factor was found to have an insignificant effect on SI to m-payment whereas the pull factor was significant. Furthermore, the results revealed that the two mooring variables have contrasting results as trust is not a significant determinant of SI to m-payment while perceived security and privacy (PSP) is. Additionally, all SQB-related relationships were found to be statistically significantOriginality/valueThis study determined the factors that play vital roles in the consumers' decision-making to transition from cash to m-payment. This was done via a uniquely developed conceptual model that incorporated the PPM framework with the SQB perspective.

scholarly journals Ambiguity seeking as a result of the status quo bias

2006 ◽  
Vol 32 (3) ◽  
pp. 175-194 ◽  
Author(s):  
Mercè Roca ◽  
Robin M. Hogarth ◽  
A. John Maule
Keyword(s):  
Status Quo ◽  
Status Quo Bias ◽  
The Status
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