Limited Attention and Status Quo Bias

35 Pages Posted: 6 Nov 2014

See all articles by Mark Dean

Mark Dean

Brown University - Department of Economics; New York University (NYU) - Department of Economics

Ozgur Kibris

Sabanci University

Yusufcan Masatlioglu

University of Michigan

Date Written: November 4, 2014

Abstract

We introduce and axiomatically characterize a model of status quo bias in which the status quo affects choices by both changing preferences and focusing attention. The resulting Limited Attention Status Quo Bias model can explain both the Önding that status quo bias is more prevalent in larger choice sets and that the introduction of a status quo can change choices between non-status quo alternatives. Existing models of status quo bias are inconsistent with the former Önding while models of decision avoidance are inconsistent with the latter. We report the results of laboratory experiments which show that both attention and preference channels are necessary to explain the impact of status quo on choice.

Keywords: Status Quo Bias, Reference Dependence, Attention, Revealed Preference

JEL Classification: D03, D83

Suggested Citation

Dean, Mark R. W. and Kibris, Ozgur and Masatlioglu, Yusufcan, Limited Attention and Status Quo Bias (November 4, 2014). Available at SSRN: https://ssrn.com/abstract=2519242 or http://dx.doi.org/10.2139/ssrn.2519242

Mark R. W. Dean (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

HOME PAGE: http://www.econ.brown.edu/fac/Mark_Dean/

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

Ozgur Kibris

Sabanci University ( email )

School of Management
Orhanli Tuzla
İstanbul, 34956
Turkey

Yusufcan Masatlioglu

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

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