A status quo bias or default bias is a cognitive bias which results from a preference for the maintenance of one's existing state of affairs. The current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss or gain. Corresponding to different alternatives, this current baseline or default option is perceived and evaluated by individuals as a positive.
Status quo bias should be distinguished from a rational preference for the status quo, as for when the current state of affairs is more beneficial than the available alternatives, or when imperfect information is a significant problem. A large body of evidence, however, shows that status quo bias frequently affects human decision-making. Status quo bias should also be distinguished from psychological inertia, which refers to a lack of intervention in the current course of affairs.
The bias intersects with other non-rational cognitive processes such as loss aversion, in which losses comparative to gains are weighed to a greater extent. Further non-rational cognitive processes include existence bias, endowment effect, longevity, mere exposure, and regret avoidance. Experimental evidence for the detection of status quo bias is seen through the use of the reversal test. A vast amount of experimental and field examples exist. Behaviour in regard to economics, retirement plans, health, and ethical choices show evidence of the status quo bias.
Examples Status quo experiments have been conducted over many fields with Kahneman, Thaler, and Knetsch (1991) creating experiments on the endowment effect, loss aversion and status quo bias. Experiments have also been conducted on the effect of status quo bias on contributions to retirement plans and Fevrier & Gay (2004) study on status quo bias in organ donations consent.
Questionnaire: Samuelson and Zeckhauser (1988) demonstrated status quo bias using a questionnaire in which subjects faced a series of decision problems, which were alternately framed to be with and without a pre-existing status quo position. Subjects tended to remain with the status quo when such a position was offered to them. Results of the experiment further show that status quo bias advantage relatively increases with the number of alternatives given within the choice set. Furthermore, a weaker bias resulted from when the individual exhibited a strong discernible preference for a chosen alternative.
Hypothetical choice tasks: Samuelson and Zeckhauser (1988) gave subjects a hypothetical choice task in the following "neutral" version, in which no status quo was defined: "You are a serious reader of the financial pages but until recently you have had few funds to invest. That is when you inherited a large sum of money from your great-uncle. You are considering different portfolios. Your choices are to invest in: a moderate-risk company, a high-risk company, treasury bills, municipal bonds." Other subjects were presented with the same problem but with one of the options designated as the status quo. In this case, the opening passage continued: "A significant portion of this portfolio is invested in a moderate risk company ... (The tax and broker commission consequences of any changes are insignificant.)" The result was that an alternative became much more popular when it was designated as the status quo.
Electric power consumers: California electric power consumers were asked about their preferences regarding trade-offs between service reliability and rates. The respondents fell into two groups, one with much more reliable service than the other. Each group was asked to state a preference among six combinations of reliability and rates, with one of the combinations designated as the status quo. A strong bias to the status quo was observed. Of those in the high-reliability group, 60.2 percent chose the status quo, whereas a mere 5.7 percent chose the low-reliability option that the other group had been experiencing, despite its lower rates. Similarly, of those in the low reliability group, 58.3 chose their low-reliability status quo, and only 5.8 chose the high-reliability option.
Automotive insurance consumers: The US states of New Jersey and Pennsylvania inadvertently ran a real-life experiment providing evidence of status quo bias in the early 1990s. As part of tort law reform programs, citizens were offered two options for their automotive insurance: an expensive option giving them full right to sue and a less expensive option with restricted rights to sue. In New Jersey the cheaper insurance was the default and in Pennsylvania the expensive insurance was the default. Johnson, Hershey, Meszaros and Kunreuther (1993) conducted a questionnaire to test whether consumers will stay with the default option for car insurance. They found that only 20% of New Jersey drivers changed from the default option and got the more expensive option. Also, only 25% of Pennsylvanian drivers changed from the default option and got the cheaper insurance. Therefore, framing and status quo bias can have significant financial consequences.
General practitioners: Boonen, Donkers and Schut created two discrete choice experiments for Dutch residents to conclude a consumer's preference for general practitioners and whether they would leave their current practitioner. The Dutch health care system was chosen as general practitioners play the role of a gatekeeper. The experiment was conducted to investigate the effect of status quo bias on a consumer's decision to leave their current practitioner, with knowledge of other practitioners and their current relationship with their practitioner determining the role status quo bias plays.
Through the questionnaire it was shown that respondents were aware of the lack of added benefit aligned with their current general practitioner and were aware of the quality differences between potential practitioners. 35% of respondents were willing to a pay a copayment to stay with their current general practitioner, while only 30% were willing to switch to another practitioner in exchange for a financial gain. These consumers were willing to pay a considerable amount to continue going to their current practitioner up to €17.32. For general practitioners the value assigned by the consumer to staying with their current one exceeded the total value assigned to all other attributes tested such as discounts or a certificate of quality.
Within the discrete choice experiment the respondents were offered a choice between their current practitioner and a hypothetical provider with identical attributes. The respondents were 40% more likely to choose their current practitioner than if both options were hypothetical providers, which would result in the probability being 50% percent for both. It was found that status quo bias had a massive impact on which general practitioner the respondents would choose. Despite consumers being offered positive financial incentives, qualitative incentives or the addition of negative financial incentives respondents were still extremely hesitant to switch from their current practitioner. The impact of status quo bias was determined as making attempts to channel consumers away from the general practitioner they are currently seeing a daunting task.
Explanations Status quo bias has been attributed to a combination of loss aversion and the endowment effect, two ideas relevant to prospect theory. An individual weighs the potential losses of switching from the status quo more heavily than the potential gains; this is due to the prospect theory value function being steeper in the loss domain. As a result, the individual will prefer not to switch at all. In other words, we tend to oppose change unless the benefits outweigh the risks. However, the status quo bias is maintained even in the absence of gain/loss framing: for example, when subjects were asked to choose the colour of their new car, they tended towards one colour arbitrarily framed as the status quo. Loss aversion, therefore, cannot wholly explain the status quo bias, with other potential causes including regret avoidance, transaction costs and psychological commitment.
Rational routes to status quo maintenance
A status quo bias can also be a rational route if there are cognitive or informational limitations.
Informational limitations Decision outcomes are rarely certain, nor is the utility they may bring. Because some errors are more costly than others (Haselton & Nettle, 2006), sticking with what worked in the past is a safe option, as long as previous decisions are "good enough".
Cognitive limitations Cognitive limitations of status quo bias involve the cognitive cost of choice, in which decisions are more susceptible to postponement as increased alternatives are added to the choice set. Moreover, mental effort needed to maintain status quo alternatives would often be lesser and easier, resulting in a superior choice's benefit being outweighed by decision-making cognitive costs. Consequently, maintenance of current or previous state of affairs would be regarded as the easier alternative.
Irrational routes The irrational maintenance of the status quo bias links and confounds many cognitive biases.
Existence bias An assumption of longevity and goodness are part of the status quo bias. People treat existence as a prima facie case for goodness, aesthetic and longevity increases this preference. The status quo bias affects people's preferences; people report preferences for what they are likely rather than unlikely to receive. People simply assume, with little reason or deliberation, the goodness of existing states.
Longevity is a corollary of the existence bias: if existence is good, longer existence should be better. This thinking resembles quasi-evolutionary notions of "survival of the fittest", and also the augmentation principle in attribution theory.
Psychological inertia is another reason used to explain a bias towards the status quo. Another explanation is fear of regret in making a wrong decision, i.e. If we choose a partner, when we think there could be someone better out there.
Mere exposure Mere exposure is an explanation for the status quo bias. Existing states are encountered more frequently than non-existent states and because of this they will be perceived as more true and evaluated more preferably. One way to increase liking for something is repeated exposure over time.
Loss aversion Loss aversion also leads to greater regret for action than for inaction; more regret is experienced when a decision changes the status quo than when it maintains it. Together these forces provide an advantage for the status quo; people are motivated to do nothing or to maintain current or previous decisions. Change is avoided, and decision makers stick with what has been done in the past.
Changes from the status quo will typically involve both gains and losses, with the change having good overall consequences if the gains outweigh these losses. A tendency to overemphasize the avoidance of losses will thus favour retaining the status quo, resulting in a status quo bias. Even though choosing the status quo may entail forfeiting certain positive consequences, when these are represented as forfeited "gains" they are psychologically given less weight than the "losses" that would be incurred if the status quo were changed.
The loss aversion explanation for the status quo bias has been challenged by David Gal and Derek Rucker who argue that evidence for loss aversion (i.e., a tendency to avoid losses more than to pursue gains) is confounded with a tendency towards inertia (a tendency to avoid intervention more than to intervene in the course of affairs). Inertia, in this sense, is related to omission bias, except it need not be a bias but might be perfectly rational behavior stemming from transaction costs or lack of incentive to intervene due to fuzzy preferences.