Status quo bias is evident when people prefer things to stay the same by doing nothing (see also inertia) or by sticking with a decision made previously (Samuelson, & Zeckhauser, 1988). This may happen even when only small transition costs are involved and the importance of the decision is great.

Field data from university health plan enrollments, for example, show a large disparity in health plan choices between new and existing enrollees. One particular plan with significantly more favorable premiums and deductibles had a growing market share among new employees, but a significantly lower share among older enrollees. This suggests that a lack of switching could not be explained by unchanging preferences.

Samuelson and Zeckhauser note that status quo bias is consistent with loss aversion, and that it could be psychologically explained by previously made commitments, sunk cost thinking, cognitive dissonance, a need to feel in control, and regret avoidance. The latter is based on Kahneman and Tversky’s observation that people feel greater regret for bad outcomes that result from new actions taken than for bad consequences that are the consequence of inaction (Kahneman & Tversky, 1982).

While status quo bias is frequently considered to be irrational, sticking to choices that worked in the past is often a safe and less difficult decision due to informational and cognitive limitations (see bounded rationality). For example, status quo bias is more likely when there is choice overload (Dean et al., 2017) or high uncertainty and deliberation costs (Nebel, 2015).

Dean, M., Kibris, O., & Masatlioglu, Y. (2017). Limited attention and status quo bias. Journal of Economic Theory169, 93-127.

Kahneman, D., & Tversky, A. (1982). The psychology of preference. Scientific American, 246, 160-173.

Nebel, J. M. (2015). Status quo bias, rationality, and conservatism about value. Ethics, 125(2), 449-476.

Samuelson, W., & Zeckhauser, R. J. (1988). Status quo bias in decision making. Journal of Risk and Uncertainty, 1, 7-59.